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#2249425 - 02/19/21 02:25 PM Beneficial Ownership and Trusts
CSB98 Offline
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Joined: Dec 2003
Posts: 1,337
Wisconsin
Need help on figuring out who the beneficial ownership is on this one.

ABC, Inc. is our borrower. ABC is owned by three separate irrevocable trusts (titled as Jane Doe Irrevocable Trust FBO John Doe). Each irrevocable trust is FBO of a different individual (John, Jack and Judy). So, is the beneficial owner Jane Doe? There are trustees listed for each irrevocable trust, which leads me to believe that Jane is deceased. If that is the case, would the owners be the FBO individuals? This one has me stumped.

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#2249429 - 02/19/21 02:45 PM Re: Beneficial Ownership and Trusts CSB98
BJ Blazko Offline
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Joined: Apr 2016
Posts: 24
from the FFIEC guidance on page 2 https://www.ffiec.gov/press/pdf/Ben...l%20Entity%20CustomersOverview-FINAL.pdf

If a trust owns directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, 25
percent or more of the equity interests of a legal entity customer, the beneficial owner is the
trustee.

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#2249549 - 02/22/21 08:52 PM Re: Beneficial Ownership and Trusts CSB98
John Burnett Offline
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Cape Cod
If there is more than one trustee for the trust, one of them must be listed as the beneficial owner of the entity (included the "Ttee" abbreviation to make it clear that a trust is involved).
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#2249572 - 02/23/21 03:54 PM Re: Beneficial Ownership and Trusts CSB98
John Burnett Offline
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John Burnett
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Cape Cod
It doesn't really matter whether Jane Doe is still alive. If she started out as trustee, but later resigned and a successor became trustee, the current trustee is the one that is identified as the owner (with the TTee designation).
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#2266855 - 02/24/22 10:21 PM Re: Beneficial Ownership and Trusts CSB98
RockChucker, CAMS Offline
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Joined: Jul 2013
Posts: 1,700
The Country
Sorry to bring BO back up but I came across a scenario that I haven't seen before and couldn't find a thread that addressed it. ABC LLC is 41% owned by a trust that is not registered with the SOS. The kicker is that the only trustee on the trust is a large financial institution who is acting on behalf of the beneficiaries of the trust. I'm thinking maybe the fact that the trustee is an FI might make it exempt but not 100% confident. Your input as always is appreciated.
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#2266858 - 02/24/22 10:28 PM Re: Beneficial Ownership and Trusts CSB98
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,685
Illinois
Trusts generally don't have to register with the SOS so that has no bearing on your question.

Look at Beneficial Ownership FAQ #20

A. If a trust owns directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, 25 percent or more of the equity interests of a legal entity customer, the beneficial owner for purposes of the ownership/equity prong is the trustee, regardless of whether the trustee is a natural person or a legal entity. In circumstances where a natural person does not exist for purposes of the ownership/equity prong, a natural person would not be identified. However, a covered institution should collect identification information on the legal entity trustee as part of its CIP, consistent with the covered institution’s risk assessment and the customer risk profile. In addition to the ownership/equity prong, covered financial institutions are also required to identify and verify a natural person as the beneficial owner of the legal entity customer under the control prong to comply with the Rule.

You don't have a natural person as trustee since the trustee is an FI. Also FIs are excluded from CIP so you would not obtain CIP info on the FI. In this case there would be no ownership prong if no natural person is a trustee or owns 25% of the legal entity. However, you would still need to identify a natural person for the control prong of the legal entity,
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#2266859 - 02/24/22 10:31 PM Re: Beneficial Ownership and Trusts CSB98
RockChucker, CAMS Offline
Diamond Poster
Joined: Jul 2013
Posts: 1,700
The Country
Beautiful! Thanks Brian!
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A successful man is one who can lay a firm foundation with the bricks others have thrown at him.
-David Brinkley

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