Is an IOLTA account subject to the new beneficial ownership rules? I have seen some interpretations as yes and some as no. Help!

I do not have specific guidance but I have seen both ways also. As of now, unless we can get clear guidance we are going to include them.

Thanks!

Current thread.

Ken--thanks for the perspective...never thought of it that way. Makes sense. Most of our attorneys we deal with are partnerships.

Same here. Thanks

Arguably, the opening of an IOLTA account by a law firm that is a legal entity is exempt from the "equity interest" owner requirement under the "intermediated account relationship" exemption.

The trouble is that no such exemption applies to any other account types, provided the law firm's legal entity structure requires them to be subjected to BO requirements. In my experience working at and with institutions, typically a firm that has an IOLTA account also has an operating account, which would not be under the "intermediated account relationship" exclusion. As such, in practice it's better to just get BO data when opening an IOLTA for all law firms subject to the rule that aren't otherwise exempt. IMHO, it makes more sense to do so from a practical perspective, even though it's not technically required.

I don't read intermediated accounts as an exemption. The legal entity (in this case the law firm) is the bank's customer for CIP and CDD purposes.

From the preamble:

In the NPRM, we proposed that if an intermediary is the customer, and the financial institution has no CIP obligation with respect to the intermediary's underlying clients pursuant to existing guidance, a financial institution should treat the intermediary, and not the intermediary's underlying clients, as its legal entity customer....

...For these reasons, FinCEN believes that attorney escrow and client trust accounts should be treated like other intermediated accounts described above, and we accordingly deem such escrow accounts intermediated accounts for purposes of the beneficial ownership requirement.

Transcript of audio message left for client:

“Hi. I’m calling from FinCen. You had sent a email last week. Umm, in regards to your email, uh, I need you to think about this in two segments for beneficial ownership – the IOLTA trust account as one, and then the law firm or lawyer as another. Uh, the IOLTA trust is quasi-government, uh, so, umm, that possibly would just have the control prong. Umm, and then you would treat the law firm or lawyer as normal, uh, for beneficial ownership. Uh, but the trust itself is quasi-government, uh, in that manner, umm, so think of it that way. Uh, if you need something further, you will need to indicate your availability. I tried going through the operator today but was unsuccessful, umm, so I ended up calling back to leave a message. Uh, thank you and have a good day.”

No comment.

<facepalm>