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#2185242 - 07/13/18 03:17 AM BO - more than one control person?
Compli(cated) Offline
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Wisconsin
The way our core is set up, each individual added as a beneficial owner has a checkbox for "Controlling Interest." So if a branch adds two 50% owners of an LLC, they tend to check "Controlling Interest" for both as well. I know FinCEN says "single individual" everywhere but I was not able to find any additional explanation on this. Can more than one person be designated under the control prong, assuming that the total number of BOs does not exceed 5?
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#2185260 - 07/13/18 01:36 PM Re: BO - more than one control person? Compli(cated)
Buddy the Elf Offline
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Buddy the Elf
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first lily pad on the right
No more than one Control Person. They just need to pick one.
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#2185262 - 07/13/18 01:37 PM Re: BO - more than one control person? Compli(cated)
StevenD Offline
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StevenD
Joined: Nov 2000
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KY
Look at the last sentence in the first topic of the second FAQ document that came out on 04/03/18. It is on the bottom of page one and the top of page two of that document.

"A covered financial institution may choose, however, to collect such information on natural persons who own a lower percentage of the equity interests of a legal entity customer as well as information on more than one individual with managerial control."
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#2185263 - 07/13/18 01:48 PM Re: BO - more than one control person? Compli(cated)
StevenD Offline
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StevenD
Joined: Nov 2000
Posts: 489
KY
That topic is also addressed in the original final rule. While it makes it clear that you only need to get one person for the control prong, it says you can get more. See the last sentence in the "note to paragraph d."

"Note to paragraph (d). The number of individuals that satisfy the definition of “beneficial owner,” and therefore must be identified and verified pursuant to this section, may vary. Under paragraph (d)(1) of this section, depending on the factual circumstances, up to four individuals may need to be identified. Under paragraph (d)(2) of this section, only one individual must be identified. It is possible that in some circumstances the same person or persons might be identified pursuant to paragraphs (d)(1) and (2) of this section. A covered financial institution may also identify additional individuals as part of its customer due diligence if it deems appropriate on the basis of risk."
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#2185264 - 07/13/18 01:49 PM Re: BO - more than one control person? Compli(cated)
Adam Witmer Offline
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Joined: Sep 2010
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I agree with Steven. The rule sets minimums but doesn't set maximums.

From the preamble to the final rule:
"We noted that the number of beneficial owners identified would vary from legal entity customer to legal entity customer due to the ownership prong—there could be as few as zero and as many as four individuals who satisfy this prong. All legal entities, however, would be required to identify one beneficial owner under the control prong. We further noted that financial institutions had the discretion to identify additional beneficial owners as appropriate based on risk."

Also:
"Note to paragraph (d). The number of individuals that satisfy the definition of “beneficial owner,” and therefore must be identified and verified pursuant to this section, may vary. Under paragraph (d)(1) of this section, depending on the factual circumstances, up to four individuals may need to be identified. Under paragraph (d)(2) of this section, only one individual must be identified. It is possible that in some circumstances the same person or persons might be identified pursuant to paragraphs (d)(1) and (2) of this section. A covered financial institution may also identify additional individuals as part of its customer due diligence if it deems appropriate on the basis of risk."
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2185363 - 07/13/18 06:35 PM Re: BO - more than one control person? Compli(cated)
John Burnett Offline
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John Burnett
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Cape Cod
That said, the control prong is not about a controlling interest, which has to do with whether one owner can control the election of directors, etc, because of the percentage of ownership. A control prong person is someone who runs the business day-to-day, and doesn't even have to be an owner. Sure, a control person may be an owner, and often is. But it's not always the case.
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