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#1783580 - 02/07/13 01:46 PM Business Accounts Beneficial Owners
Anonymous
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Our organization is opening business accounts on a consumer platform and cant always fit all the beneficial owners of the business in the account owner cells. Since we cant search other fields for OFAC, 314(a), and BSA issues, we have told the customer contact folks that any business with more than 3 owners need to take their business elsewhere. We hate turning business away and are facing increasing pressures to find some flexibility here.

It is our understanding that we need to have a reasonable knowledge of our customer in order to comply with the spirit of the BSA and related regulations. As such, we need to know many things about each business, including who are the owners of the company in question. If we have 4 owners of a business and only 2 are authorized to transact on the account, are we in compliance if we only monitor the entity name and the two authorized users? We say no since we unable to reasonably search for these beneficiaries on the various registries and we cant aggregate their cash transactions properly if we dont assign them a unique identifier (i.e. SSN).

Can you advise what your organizations are doing? Are you searching ALL beneficial owners or only the ones authorized for the account?

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#1783591 - 02/07/13 02:09 PM Re: Business Accounts Beneficial Owners Anonymous
Dani York, CRCM Offline
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TN
We only search the ones on the account (actual account owner and authorized signers). I was under the impression that beneficial owners are a hot topic as far as CDD and EDD if warranted, but am unaware of any requirement to conduct OFAC and 314a searches on beneficial owners. Someone please correct me if I am wrong.
Last edited by Dani York, CRCM; 02/07/13 02:10 PM.
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#1783597 - 02/07/13 02:24 PM Re: Business Accounts Beneficial Owners Anonymous
MagicCity Offline

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I believe comments are still being taken on the topic and the ABA is fighting the requirement as it places a large burden on banks, especially since many states allow secrecy in company registrations.
Also, I think that if it does become law, they are looking at those owners with 25% interest or greater.
Your BSA program, including OFAC should be risk based so depending on your customer base and location you can choose how indepth you wish to go.
Hope this helps you.

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#1784079 - 02/08/13 02:09 PM Re: Business Accounts Beneficial Owners Anonymous
Elwood P. Dowd Offline
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Quote:
we have told the customer contact folks that any business with more than 3 owners need to take their business elsewhere.


That's a pretty extreme over reaction.

There is an ANPRM on this subject, but as of today there is only guidance that suggests you should identify beneficial owners of high risk customers. As noted OFAC searches are risk based and someone would have to own 51% of an entity for a hit on that person to constitute a hit on the entity. 314(a) searches are rules based and, without going into detail in a public forum, would not require you to search on owners.
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#1784327 - 02/08/13 07:17 PM Re: Business Accounts Beneficial Owners Anonymous
BrendaC Offline
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Sweet Home AL
As an alternative, you could document the non-personal entity and its owners, along with other appropriate CIP information, manually on an application form. You could screen the persons manually prior to account opening. Documentation to your system could then reflect those with a certain % ownership as determined by your policy/procedures. Might be an option worth exploring to avoid having to send potential customers down the street.
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#1784358 - 02/08/13 08:14 PM Re: Business Accounts Beneficial Owners Anonymous
JacF Offline

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Originally Posted By: Anonymous
Our organization is opening business accounts on a consumer platform

I think this is the problem that you should be seeking to remedy. If your organization has decided that you want to provide services to business customers, you should invest in the resources to do so correctly. Otherwise, the more your business customer base grows, the more you will find that your BSA conondrum is only the first of many square pegs.

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#1784375 - 02/08/13 08:38 PM Re: Business Accounts Beneficial Owners Anonymous
BrendaC Offline
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Sweet Home AL
Agreed. You always create multiple issues when you design a process to fit round pegs in square holes. Heaven help you if/when you have a software conversion.
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#1784503 - 02/09/13 12:26 PM Re: Business Accounts Beneficial Owners Anonymous
rlcarey Offline
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Joined: Jul 2001
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Galveston, TX
Must be a credit union.
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