Would beneficial ownership on the master relationship be triggered each time they create a virtual sub-account via a virtual sub-accounting system? If yes, how would an FI go about confirming (verbally or in writing) that beneficial ownership information previously collected has not changed?

Could you define a virtual sub-account so we can better answer your question?

Clients of the Bank establish their own sub-accounts via a self-servicing module, operating as a web application on the bank’s on-line web server.

So am I correct that they are not really accounts? How do these sub accounts function?

My apologies - I realize this is a bit ambiguous. I am trying to piece it together myself and struggling!. Essentially, there is a core module and a client-facing self-servicing module. The core module, where all permanent processing of escrow accounts takes place, operates on the Bank's mainframe computer (same platform as other core applications) and serves as the "system of record". The client-facing self-servicing module, accessed via the Internet, operates on the Bank's web server and enables clients (and bank personnel) to establish and manage their client's escrow accounts.

Each client that receives escrow services has a special DDA account on the Bank's DDA System and a corresponding Master Account and associated Escrow Accounts in the client-facing self-servicing module. The Master Account is assigned the same Account number as its corresponding DDA account from where its transactions are copied.

All escrow deposits are made to the client's DDA account. New DDA Transactions are copied to the client's Master Account or automatically assigned to one of the Master’s Escrow Accounts. Deposits copied to the Master are then allocated to one of the Master’s Escrow Accounts either by the Bank's client or by a Bank employee. The existing balances in the Escrow Accounts plus any unallocated balances in the Master Account should always equal the DDA account’s balance.

Again, my apologies as this has proven to be difficult to digest/explain.

Based on what you are sharing I don't believe the sub-accounts would qualify as an "account" for Beneficial Ownership purposes and appears to be more of a convenience item.

But I would be interested to see what others think.