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#2169754 - 03/22/18 10:11 PM Beneficial Ownership Questionnaire
Inquirer Offline
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The Best Coast
As we are nearing the final date for Beneficial Ownership, I was curious of what kind of CDD/ADD/EDD Questions are being added for beneficial owners. Of course, these are in addition to the existing CDD/ADD/EDD Questions.

Thank you.

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BSA/AML/CIP/OFAC Forum
#2169759 - 03/22/18 10:18 PM Re: Beneficial Ownership Questionnaire Inquirer
rlcarey Offline
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And you would add CDD/ADD/EDD Questions for beneficial owners for what reason?
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#2169762 - 03/22/18 10:35 PM Re: Beneficial Ownership Questionnaire Inquirer
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To appropriately risk rate beneficial owners and the legal entities. Are other banks not risking rate BOs as you would any other customer?

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#2169763 - 03/22/18 10:42 PM Re: Beneficial Ownership Questionnaire Inquirer
rlcarey Offline
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They are not customers - not sure why you would. If you think that you are going to get anything more from them than an ID, well good luck.
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#2169768 - 03/23/18 10:39 AM Re: Beneficial Ownership Questionnaire Inquirer
Elwood P. Dowd Offline
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All banks are required to do is perform a watered down version of CIP; i.e. accept a photocopy of identification and confirm enough information to establish a reasonable belief that this person exists. The purpose of due diligence in formation is to establish a baseline for comparison to future activity. This person isn't going to have any future activity.

At most, you could do "negative news" and OFAC searches on the name and still be within the realm of reason.
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#2169771 - 03/23/18 11:36 AM Re: Beneficial Ownership Questionnaire Inquirer
TryingtoComply Offline
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The requirement to perform CDD applies to the legal entity customer, not the beneficial owners.

You should already be obtaining information on baseline (normal and expected) activity which you can use to compare to actual activity in the future. The rule only clarified this requirement and also made it a pillar.
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#2169803 - 03/23/18 01:40 PM Re: Beneficial Ownership Questionnaire Inquirer
Daisy Doodle Offline
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Individual risk assessments of beneficial owners do not make sense...

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#2169837 - 03/23/18 02:53 PM Re: Beneficial Ownership Questionnaire Inquirer
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Thank you all for the feedback. You are all correct. Sometimes, you just need to hear it from someone else. smile

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#2169907 - 03/23/18 05:48 PM Re: Beneficial Ownership Questionnaire Inquirer
Bec Offline
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The Great White North
Since I saw OFAC on here, I thought I would piggy back a question. Say you have a business that is owned by a business that is owned by another business, you finally drill down to the heart beat and it is a beneficial ownership situation. Is it advisable to perform an OFAC search on all of the businesses in the string of businesses?
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#2169910 - 03/23/18 05:52 PM Re: Beneficial Ownership Questionnaire Inquirer
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Bec, I was under the impression that you wouldn't have to continue to the heart beat, unless the heart beat owned 25% or more of the Legal Entity. David Dickinson provided great examples in a previous post.

https://www.bankersonline.com/forum/ubbt...ges#Post2166872

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#2169916 - 03/23/18 06:06 PM Re: Beneficial Ownership Questionnaire Inquirer
Bec Offline
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But couldn't there be situations in which you had several entities to drill through before you got the heartbeat and that heartbeat could still be a 25% owner of the original business accountholder?
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#2169943 - 03/23/18 06:55 PM Re: Beneficial Ownership Questionnaire Inquirer
Bec Offline
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I guess to simplify the question, do we have to OFAC all players in the beneficial ownership situation? For instance if you have Jeff's Donuts 50% owned by Jeff and 50% owned by Jill's Coffee Shop (100% owned by Jill) and Mary is the manager/CEO of Jeff's Donuts, you would effectively have to OFAC Jeff's Donuts, Jeff, Jill's Coffee Shop, Jill and Mary. Am I right?
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#2169944 - 03/23/18 06:58 PM Re: Beneficial Ownership Questionnaire Bec
Elwood P. Dowd Offline
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You are never required to do an OFAC check; comparing names to the OFAC list is always a risk based decision.

If an individual, directly or indirectly, owns 50% or more of the legal entity customer opening the account, a hit on the individual is a hit on the legal entity customer. On any lesser percentage, checking the OFAC list is an obvious waste of time...
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#2169958 - 03/23/18 07:27 PM Re: Beneficial Ownership Questionnaire Inquirer
Bec Offline
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In my scenario above, since both individuals own 100% of each business, it would be recommended to check all of the names off the OFAC list? And what your saying also is if Jill owned 25% of Jill's Coffee, checking Jill's Coffee is pointless? I feel like I am missing something here.
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#2169973 - 03/23/18 08:12 PM Re: Beneficial Ownership Questionnaire Inquirer
bcompliance Offline
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It is a risk based decision, as Ken pointed out. We are OFAC'ing everyone as they will be on our core. It was just easier to do that way.
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