Document for use in drilling down BO percentages?

Posted By: ABT

Document for use in drilling down BO percentages? - 03/06/18 04:59 PM

Does anyone have a document they are using and can share for drilling down beneficial ownership when a legal entity is owned by one or more other legal entities of 25% or more? I need a "tool" for our front line staff and lenders to use when they are helping customers determine the BO percentage layers down to natural persons of their legal entity.
Posted By: Daisy Doodle

Re: Document for use in drilling down BO percentages? - 03/06/18 05:23 PM

Me too. I was going to sit down and create one, but haven't done it yet. Needs to be very simple!
Posted By: ABT

Re: Document for use in drilling down BO percentages? - 03/06/18 05:36 PM

I agree with the simplicity of the document so it is easy for front line staff and customers to use.
Posted By: David Dickinson

Re: Document for use in drilling down BO percentages? - 03/06/18 06:05 PM

We have a free "Certificate of Beneficial Owner" form that might help you. It's in the "BSA Tools (Free Downloads)" box at our store. Here's a direct link. I think that may help you out.
https://www.bankerscompliance.com/resources/

Free Downloads is at bottom left of linked page.
Posted By: Lilly C

Re: Document for use in drilling down BO percentages? - 03/06/18 06:55 PM

I think they are looking for a flowchart not the form.
Posted By: Daisy Doodle

Re: Document for use in drilling down BO percentages? - 03/06/18 07:11 PM

Right. Something that does the math for them, is what I had in mind to try to create.
Posted By: ABT

Re: Document for use in drilling down BO percentages? - 03/06/18 07:37 PM

Yes, I'm looking for a document to make the BO percentage easy to calculate for the frontline staff helping the person opening the legal entity's account. Perhaps in an Excel spreadsheet format?
Posted By: Always In Training

Re: Document for use in drilling down BO percentages? - 03/06/18 08:11 PM

Sitting through a webinar on this, The example given was Company A owned by Person B and Company C, Okay Person A was a BO, checking for Company C, it was owned by Person D and Company E. Company E was owned by Companies F & G and it was a topic of debate that no one would have to drill any further because there wouldn't be a natural person that owned 25% or more of Company A. It seems crazy that you don't have to keep digging.
Posted By: Always In Training

Re: Document for use in drilling down BO percentages? - 03/06/18 08:13 PM

Guess I'm getting at, I think it has to be a flowchart and not a calculator. You almost have to draw them out as a tree and every company is going to be different.
Posted By: Daisy Doodle

Re: Document for use in drilling down BO percentages? - 03/06/18 08:16 PM

I was hoping that once it was flowcharted a calculator could be built in (maybe needed at each level). Haven't tried yet. Need to be a one pager, if possible.
Posted By: TryingtoComply

Re: Document for use in drilling down BO percentages? - 03/06/18 08:55 PM

Yeah, we would all love that kind of tool. We talked about it too, but it would be an expanding flowchart and since there could be many different scenarios, I thing that would be difficult to do in Excel. But that's not to say it couldn't be done.

Consider creating several examples from the most simple and working up to more complex.

Here's a plug: Bankers Compliance Consulting did a webinar called BSA/AML Annual Overview Compliance Webinar that did just that. You can use the examples they provided to create the flowcharts in PowerPoint. I taught myself how in less than 30 minutes and created a bunch of scenarios.

For a couple hundred bucks you will receive some great material to help you develop your own training.

You're welcome David. smile
Posted By: David Dickinson

Re: Document for use in drilling down BO percentages? - 03/07/18 02:54 PM

Thank you! smile
Posted By: David Dickinson

Re: Document for use in drilling down BO percentages? - 03/07/18 03:49 PM

After reading the complimentary post above from TryingToComply, I thought it might be helpful to give some more Beneficial Owner info. The following came from our April 2017 Newsletter ("Banking on BCC") https://store.bankerscompliance.com I hope this is helpful.

Beneficial Owner Scenarios
By now you should all be aware of the new Beneficial Owner rules that are mandatory on May 11, 2018. On the surface, it sounds pretty simple. You just ask the person opening an account for a legal entity, who the “individual” beneficial owner(s) are that have 25% or more ownership in that entity. How hard can that be, right? After all, FinCEN expects “that a legal entity that has a complex structure would have personnel who necessarily have a general understanding of the ownership interests of the natural persons behind it for operational, management, accounting, and other purposes.” The bank doesn’t have to confirm the status of the beneficial owner(s), you just “rely on the beneficial ownership information supplied by the customer, provided you have no knowledge of facts that would reasonably call into question the reliability of the information.” Let’s just say, it’s not as easy as it may seem. We’ve put together some pretty typical scenarios that will prove this point.

Not only should employees who open accounts have an understanding of who an “individual” beneficial owner is and how deep into the web you have to go to identify them, you may also need to train your customers. Does that person sitting in front of you opening the account really know who the entity’s beneficial owners are, as defined by the new rule? This isn’t something they will want to just guess at or assume, because their word is on the line. They must sign and certify that the information they are providing you, about the entity’s beneficial owners, is true and accurate to the best of their knowledge. If they are not truthful, or knowingly provide you with inaccurate information, that signed certification gives law enforcement the right to go after them for “fraudulent application”. Falsifying documents is a very serious offense and is generally classified as a felony.

Does your action plan for implementing the new beneficial owner rules include training appropriate personnel on the definition of and various examples of, “beneficial owners”? The following scenarios provide examples of the potential layers involved in identifying those 25% beneficial owners. In every scenario, the “control prong” will always apply. We will start with the most basic scenario and build from there.

1. General Examples:
In each of the following scenarios Jack’s Donuts, Inc. is requesting some type of a new account (new loan, new deposit account, etc.):

a. General Scenario 1:
Jack’s Donuts, Inc. is owned 100% by Jack. Jack is the President and primary person with management control over the company.

Beneficial Owner(s): Jack (100% ownership)

Control Person: Jack


b. General Scenario 2:
Jack’s Donuts, Inc. is owned 100% by Jack. Jack has hired Candy, as Chief Operating Officer, to manage the company.

Beneficial Owner(s): Jack (100% ownership)

Control Person: Candy


c. General Scenario 3:
Jack’s Donuts, Inc. is owned 50% by Jack and 50% by Jill. Candy is the Chief Operating Officer and has management control over the company.

Beneficial Owner(s): Jack (50% ownership) and Jill (50% ownership)

Control Person: Candy


d. General Scenario 4:
Jack’s Donuts, Inc. is owned 50% by Jack; 25% by Jill; and 25% by Candy. Candy is the Chief Operating Officer and has management control over the company.

Beneficial Owner(s): Jack (50% ownership), Jill (25% ownership) and Candy (25% ownership)

Control Person: Candy


e. General Scenario 5:
Jack’s Donuts, Inc. is owned 20% by Jack; 20% by Jill; 20% by Sally; 20% by Bill; and 20% by Candy. Candy is the Chief Operating Officer and has management control over the company.

Beneficial Owner(s): Not Applicable (No individual owns at least 25% of Jack’s Donuts)

Control Person: Candy


f. General Scenario 6:
Jack’s Donuts, Inc. is owned 50% by Jack and 50% by Jill’s Coffee Company, L.L.C. Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Assume Jill’s Coffee Company, L.L.C is not an exempt legal entity. Jill’s Coffee Company, L.L.C. is owned 100% by Jill.

Beneficial Owner(s): Jack (50% ownership) and Jill (50% ownership through Jill’s Coffee Company, L.L.C.)
Control Person: Candy


g. General Scenario 7:
Jack’s Donuts, Inc. is owned 50% by Jack and 50% by Jill’s Coffee Company, L.L.C. Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Assume Jill’s Coffee Company, L.L.C. is not an exempt legal entity. Jill’s Coffee Company, L.L.C. is owned 50% by Jill and 50% by Jane.

Beneficial Owner(s): Jack (50% ownership), Jill (25% ownership through Jill’s Coffee Company, L.L.C.) and Jane (25% ownership through Jill’s Coffee Company, L.L.C.).

Control Person: Candy


h. General Scenario 8:
Jack’s Donuts, Inc. is owned 50% by Jack and 50% by Jill’s Coffee Company, L.L.C. Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Assume Jill’s Coffee Company, L.L.C. is not an exempt legal entity. Jill’s Coffee Company, L.L.C. is owned 50% by Jill, 25% by Jane and 25% by Bill.

Beneficial Owner(s): Jack (50% ownership) and Jill (25% ownership through Jill’s Coffee Company, L.L.C.)
Jane and Bill are not considered beneficial owners since they each only have 12.5% ownership in Jack’s Donuts, Inc. (through Jill’s Coffee Company, L.L.C.)

Control Person: Candy


i. General Scenario 9:
Jack’s Donuts, Inc. is owned 50% by Jack and 50% by Jill’s Coffee Company, L.L.C. Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Assume Jill’s Coffee Company, L.L.C. is not an exempt legal entity. Jill’s Coffee Company, L.L.C. is owned 25% by Jill, 25% by Jane, 25% by Bill and 25% by Sally.

Beneficial Owner(s): Jack (50% ownership)
Jill, Jane, Bill and Sally are not considered beneficial owners since they each only have 12.5% ownership in Jack’s Donuts, Inc. (through Jill’s Coffee Company LLC)

Control Person: Candy


j. General Scenario 10:
Jack’s Donuts, Inc. is owned 50% by Jack and 50% by Jill’s Coffee Company. Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Assume Jill’s Coffee Company is a publicly traded company (exempt legal entity). Beneficial Owner(s): Jack (50% ownership)
Jill’s Coffee Company is an exempt legal entity and therefore free from any further 25% beneficial ownership identification.

Control Person: Candy


2. Charity/Non-ProfitExample:
In this example Jane, Secretary for ABC Church, is requesting some type of new account (new loan, new deposit, etc.). Jane has managerial control for the church.

BeneficialOwner(s): Not Applicable (Non-profits are exempt from the 25% beneficial ownership requirements)

Control Person: Jane


3. TrustasaBeneficialOwnerExamples:
In each of the following scenarios, Jack’s Donuts, Inc. is requesting some type of a new account (new loan, new deposit account, etc.):

a. TrustScenario1:
Jack’s Donuts, Inc. is owned 100% by Jack’s Trust. Jack is the only Trustee (100% ownership). Jack is also the President of Jack’s Donuts, Inc. and has management control over the company.

Beneficial Owner(s): Jack (as the 100% trustee through Jack’s Trust) Control Person: Jack


b. TrustScenario2:
Jack’s Donuts, Inc. is owned 100% by Jack and Jill’s Trust. Jack and Jill are the Trustees (each have 50% ownership). Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Beneficial Owner(s): Jack and Jill (each is a 50% trustee through Jack and Jill’s Trust)

Control Person: Candy



c. Trust Scenario 3:
Jack’s Donuts, Inc. is owned 100% by J & J Trust. Jack, Jill, John, Jane and Sally are the Trustees (each have a 20% ownership). Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Beneficial Owner(s): Not Applicable (No individual owns at least 25% of Jack’s Donuts)

Control Person: Candy


d. Trust Scenario 4:
Jack’s Donuts, Inc. is owned 100% by J & J Trust. ABC Bank is the Trustee (100% ownership). Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Assume ABC Bank is an exempt legal entity as a federal or state regulated financial institution.

Beneficial Owner(s): Not Applicable (No individual owns at least 25% of Jack’s Donuts)

ABC Bank is an exempt legal entity and therefore free from any further 25% beneficial ownership identification.

Control Person: Candy


As you can see, it can get pretty complicated! While the bank is not required to research and confirm the status of the beneficial owners, it’s a good idea for appropriate employees and the customer to understand the basics of who is and is not an “individual” beneficial owner.
Posted By: ABT

Re: Document for use in drilling down BO percentages? - 03/07/18 04:24 PM

Thank you David! These scenario examples are excellent and will be useful for training staff.
Posted By: TryingtoComply

Re: Document for use in drilling down BO percentages? - 03/07/18 05:01 PM

David you are so generous! You probably just made a bunch of people's day with that post. smile
Posted By: Sunshine Lady

Re: Document for use in drilling down BO percentages? - 03/07/18 05:09 PM

Thank you, it helps to simply using the different scenarios.
Posted By: ahou

Re: Document for use in drilling down BO percentages? - 03/07/18 07:51 PM

Wow, thanks David. Just what I needed.
Posted By: Buddy the Elf

Re: Document for use in drilling down BO percentages? - 03/07/18 09:56 PM

So helpful! Thank you very, very much!!!!
Posted By: Cape Codder

Re: Document for use in drilling down BO percentages? - 03/09/18 03:13 PM

Originally Posted By David Dickinson


3. TrustasaBeneficialOwnerExamples:
In each of the following scenarios, Jack’s Donuts, Inc. is requesting some type of a new account (new loan, new deposit account, etc.):

a. TrustScenario1:
Jack’s Donuts, Inc. is owned 100% by Jack’s Trust. Jack is the only Trustee (100% ownership). Jack is also the President of Jack’s Donuts, Inc. and has management control over the company.

Beneficial Owner(s): Jack (as the 100% trustee through Jack’s Trust) Control Person: Jack


b. TrustScenario2:
Jack’s Donuts, Inc. is owned 100% by Jack and Jill’s Trust. Jack and Jill are the Trustees (each have 50% ownership). Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Beneficial Owner(s): Jack and Jill (each is a 50% trustee through Jack and Jill’s Trust)

Control Person: Candy


c. Trust Scenario 3:
Jack’s Donuts, Inc. is owned 100% by J & J Trust. Jack, Jill, John, Jane and Sally are the Trustees (each have a 20% ownership). Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Beneficial Owner(s): Not Applicable (No individual owns at least 25% of Jack’s Donuts)

Control Person: Candy


d. Trust Scenario 4:
Jack’s Donuts, Inc. is owned 100% by J & J Trust. ABC Bank is the Trustee (100% ownership). Candy is the Chief Operating Officer of Jack’s Donuts, Inc. and has management control over the company.

Assume ABC Bank is an exempt legal entity as a federal or state regulated financial institution.

Beneficial Owner(s): Not Applicable (No individual owns at least 25% of Jack’s Donuts)

ABC Bank is an exempt legal entity and therefore free from any further 25% beneficial ownership identification.

Control Person: Candy.


Hello, David. Thank you so much for this document. I'm a bit confused about the Trust scenarios you provided in Section 3, however. If I understand the final rule correctly, if the beneficial owner of a legal entity customer is a Trust, the trustee(s) of that trust will be recorded on the certification. Why would the trustees % of ownership in the Trust have any bearing on that requirement?
Posted By: rlcarey

Re: Document for use in drilling down BO percentages? - 03/09/18 03:45 PM

I think the use of the term ownership when it comes to a trust is a little misleading. Trustees do not actually own the trust, they only control it.

The final rule says:

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 paragraph (d)(1) of this section shall mean the trustee.

And I think this that should have reflected "trustee(s)" - whether or not there is one, two or ten of them. The trust still owns 25 percent or more - all trustees control the trust.
Posted By: Cape Codder

Re: Document for use in drilling down BO percentages? - 03/09/18 06:43 PM

Thanks. That was my take, as well.
Posted By: fmissle

Re: Document for use in drilling down BO percentages? - 03/12/18 11:27 PM

Originally Posted By rlcarey
I think the use of the term ownership when it comes to a trust is a little misleading. Trustees do not actually own the trust, they only control it.

The final rule says:

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 paragraph (d)(1) of this section shall mean the trustee.

And I think this that should have reflected "trustee(s)" - whether or not there is one, two or ten of them. The trust still owns 25 percent or more - all trustees control the trust.

Hopefully this will be clarified when the (anyday now!) new FAQ comes out, but a follow up.

Jack's Donuts is owned
25% by Bill
25% by Jane
25% by Sally
25% by the Jill Family Trust. The trust has 4 Trustees (assume none of these trustees are other owners).
Candy is the COO

In this case, would you theoretically put 6 BO? That doesn't seem right since they say multiple times that the most you could have for the ownership is 4.
Or do you consider that each of the trustees "owns" 11.25% of Jack's donuts and so none of them are listed?
Posted By: TryingtoComply

Re: Document for use in drilling down BO percentages? - 03/13/18 12:00 AM

fmissle,

I have already conducted my first round of training and this exact question came up. That is: If there are multiple trustees do they all have to be listed on the certification? My response was "yes" as that is my understanding.

The final rule says:

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 paragraph (d)(1) of this section shall mean the trustee.

I'm wondering if they made a mistake and intended that the trustee be identified as the controlling person (which is also a beneficial owner) and if they will be correcting this? In this case, the person opening the account could pick ONE and enter them as the controlling person.
Posted By: David Dickinson

Re: Document for use in drilling down BO percentages? - 03/14/18 05:21 PM

Thank you all for questioning our information about trusts. I passed this on to one of the experts on my Team. She replied:

It makes sense to me that a Trustee only has control and not “ownership” in the Trust, so you wouldn’t take the 25% ownership into consideration, you would just look to ALL of the trustees for Beneficial Owners. (You still need the Control Person who has management control in the Legal Entity opening the account). I reached out to FinCEN to confirm this is what they intended and they confirmed that “all Trustees are considered beneficial owners of a legal entity that is owned 25% or more by a Trust."

Thus, this changes our scenarios on Trusts as beneficial owners - especially Trust Scenario 3. Previously, we had said the 25% beneficial ownership was Not Applicable because there were 5 Trustees and none of them had 25% ownership in the Trust. Since we now agree this is irrelevant, ALL the Trustees of a Trust will be beneficial owners under the 25% rule.


I'm sorry for the confusion and thankful for the BOL community questioning this!
Posted By: TryingtoComply

Re: Document for use in drilling down BO percentages? - 03/14/18 05:51 PM

I'm confused. Beneficial owner has two prongs; ownership and control. Under which section of the form would the trustees be identified if using the model form? Section I for beneficial owners or Section II for control person?

The reason I'm confused is that you started out talking about how it makes sense for trustees to be identified under the control prong. But it sounds like FinCEN wants them identified under the ownership prong?

Our form only has four sections to collect beneficial owners (similar to the model form). Using the scenario with five trustees that was provided in your training, we would need to add an additional form in a situation like this.
Posted By: John Burnett

Re: Document for use in drilling down BO percentages? - 03/14/18 06:08 PM

My view: Assume that your entity is an LLC. It is owned 25% by Joe Jones, 25% by Harry Smith, 25% by Harriet Packard, and 25% by the Birdie Trust, Sam Snerd and Lion Woods, trustees. You would have four beneficial owners:
1. Joe Jones
2. Harry Smith
3. Harriet Packard
4. Sam Snerd and Lion Woods, TTEES.

The control prong will depend on who manages the LLC.
Posted By: TryingtoComply

Re: Document for use in drilling down BO percentages? - 03/14/18 06:36 PM

My impression is that Sam and Lion are two individuals that would require that we collect information on both. Which means that my form does not have a Section 1 for Lion Woods. I would have to add another page.
Posted By: John Burnett

Re: Document for use in drilling down BO percentages? - 03/14/18 07:28 PM

The problem is that FinCEN, in its lack of precision in drafting the rule, failed to recognize that a trust can have more than one trustee, each with full "ownership" interest in the trust. The rule says "trustee" (singular). I wonder if this is one of those burning questions that FinCEN is trying to cover in its long-awaited updated FAQ.
Posted By: TryingtoComply

Re: Document for use in drilling down BO percentages? - 03/14/18 07:59 PM

I hope so!

I'm conducting training now and this is one of the issues that employees are having a hard time with. We are using 25% as our threshold and I would like to be able to say there will never be more than 4 beneficial owners on the form, but that is not true using the scenario that we just discussed. It just make it hard for them to understand, particularly since they have a short runway for getting this down before we go live.
Posted By: Dirving

Re: Document for use in drilling down BO percentages? - 03/14/18 11:02 PM

Originally Posted By TryingtoComply:
The reason I'm confused is that you started out talking about how it makes sense for trustees to be identified under the control prong. But it sounds like FinCEN wants them identified under the ownership prong?


To clarify, I was not stating that it makes sense for trustees to be identified under the Control Prong. I was stating that, since a trustee only has control of, and not "ownership" in the Trust, you would not apply the "25%" ownership rule to the individual trustees. ALL trustees would just be Beneficial Owners (under the 25% rule because the "Trust" has 25% or more ownership in the legal entity customer). You still need the Control Person who has management control in the Legal Entity opening the account.

I hope that helps.
Posted By: David Dickinson

Re: Document for use in drilling down BO percentages? - 03/17/18 06:02 PM

The above post from Dirving is from the consultant on my Team that wrote the scenarios I posted earlier. I hope that helps you understand the context of her reply.
Posted By: Elwood P. Dowd

Re: Document for use in drilling down BO percentages? - 03/18/18 09:13 AM

Quote:
I would like to be able to say there will never be more than 4 beneficial owners on the form,


You can't.

First, the individual listed under the control or management prong is also referred to as a beneficial owner. (That's regardless of whether he or she has any ownership interest.) The fact that it would in some cases be a misnomer was pointed out to FinCEN in the comment process. They ignored it.,

Second, if a trust or trusts are beneficial owners there is no "cap" on the number of names you might list. No one commented on that because it simply was not mentioned in the NPRM. (I'm quite certain its obvious lack of logic would have drawn fire if it had been.)

Just a suggestion, don't train the masses on the remotely, but theoretically possible...all it does is convince your audience they don't understand what they actually need to know 99% of the time.
Posted By: David Dickinson

Re: Document for use in drilling down BO percentages? - 03/20/18 09:50 PM

Quote:
Just a suggestion, don't train the masses on the remotely, but theoretically possible...all it does is convince your audience they don't understand what they actually need to know 99% of the time.

Great comment Ken. When I teach and someone gets into the minutia, I say "We can teach 98% of this in ____ minutes. We can spend 4 hours on the 2%. However, I doubt that's what most want to do. Let's talk about the 2% later over a beer." smile Stick to what people need to know most of the time and teach them to contact you for the other 2%.
Posted By: John Burnett

Re: Document for use in drilling down BO percentages? - 03/30/18 05:55 PM

The beer, David, will make that 2% of the minutia seem a lot easier to understand.

For what it's worth, I loved the scenarios you posted until you got to the trust as a beneficial owner. FinCEN should have made this a lot easier by saying that the trust is to be identified as the beneficial owner, period. But it wants to be able to see who the trust is controlled by because the thrust of the rule is "Who is the man behind the curtain?" Who pulls the strings behind the legal entity customer?

Another piece of that 2% of minutia that hopefully won't come up often is how to aggregate individuals' ownership interest as you drill down into the levels of entity ownership. This can be an issued with multilayered ownership via LLCs, for example. Without getting overly bogged down in detail, suffice it to say that one individual can own a piece of multiple LLCs (or corporations or other entities).

For example, take Jim's Sporting Goods LLC, which is owned by five LLCs, each with a 20% interest in Jim's Sporting Goods LLC. Let's call them LLC 1, LLC 2, LLC 3, LLC 4 and (you guessed it!) LLC 5. Jim Smith and his wife own part of each of those LLCs, and each of the numbered LLCs has three other owners. Here's the breakdown:

LLC 1
15% - Jim Smith
15% - Jim's wife
10% - Sara Jones
10% - Harry Jones
50% - Guido Roma

LLC 2
15% - Jim Smith
15% - Jim's wife
10% - Mary Jones
20% - Tony Jones
40% - Guido Roma

LLC 3
15% - Jim Smith
15% - Jim's wife
30% - Mary Jones
35% - Tony Jones
5% - Guido Roma

LLC 4
25% - Jim Smith
25% - Jim's wife
15% - Mary Jones
10% - Tony Jones
25% - Guido Roma

LLC 5
25% - Jim Smith
25% - Jim's wife
20% - Harry Jones
10% - Mary Smith
20% - Guido Roma

You do the math to determine the indirect ownership percentage of each individual. When Jim Smith, for example, has an ownership in more than one of the numbered LLCs, you do the math for each of his ownership interests and combine them to determine his indirect ownership of Jim's Sporting Goods LLC.

If I've done the math correctly, Jim Smith has 19% indirect ownership; Jim's wife also has 19%. Sara Jones owns 2%; Harry Jones has 6%; Mary Jones, 13%; Tony Jones 11%; Mary Smith 2% and Guido Roma 28%.

So you start with an entity called Jim's Sporting Goods LLC and by digging, discover that the only individual with 25% or more direct or indirect ownership is Guido Roma, two ownership tiers removed, with ownership scattered among five different entities.

It gets worse if you have a couple of entity owners in tier 1 and a couple more in tier 2.
Posted By: TryingtoComply

Re: Document for use in drilling down BO percentages? - 03/30/18 09:14 PM

We are a business bank and I can envision this happening.

Hand the customer the form. Tell them to complete it. Rely on it. If you have different information on file, deal with it.
Posted By: Elwood P. Dowd

Re: Document for use in drilling down BO percentages? - 03/31/18 11:38 AM

Ditto.

All of this effort expended on developing the equivalent of a spread sheet and literally verifying ownership based on unsupportable statements is a self inflicted wound.

Ask the question. Write down the answer. Go on to what's next.
Posted By: Dirving

Re: Document for use in drilling down BO percentages? - 04/03/18 07:55 PM

We finally have FinCEN clarification on identifying the Trustee(s) as Beneficial Owners when a Trust has 25% or more ownership interest in a Legal Entity customer opening a new account!

Per the JUST RELEASED Guidance FIN-2018-G001: "Where there are multiple trustees, or co-trustees, financial institutions are expected to collect and verify the identity of, at a minimum, one co-trustee of a multi-trustee trust who owns 25% or more of the equity interests of a legal entity customer . . . " "A covered financial institution may choose to identify additional co-trustees as part of its customer due diligence, based on its risk assessment and the customer risk profile and in accordance with the institution's account opening procedures."
Posted By: Always In Training

Re: Document for use in drilling down BO percentages? - 04/04/18 02:47 PM

Per the JUST RELEASED Guidance FIN-2018-G001: "Where there are multiple trustees, or co-trustees, financial institutions are expected to collect and verify the identity of, at a minimum, one co-trustee of a multi-trustee trust who owns 25% or more of the equity interests of a legal entity customer . . . " "A covered financial institution may choose to identify additional co-trustees as part of its customer due diligence, based on its risk assessment and the customer risk profile and in accordance with the institution's account opening procedures."


-- This makes less sense than it did before.

I'm going back to, ask the question - use their answer unless you know otherwise.

I also don't think most people that work for a company that is owned for another company - that come in to open an account for a business know anything about its ownership as evidenced by when of the publically traded discount stores came in with papers from corporate that they didn't need to provide us anything they were exempt from BSA. Ummm.... no, I still need your docs. How am I to know you are wholly owned by a publically traded entity if you won't point me in that direction or give me any of your information. There's BSA and then there is policy. I know the difference, but there's got to be some give and take. All the newly hired manager would do was cross his arms and sit in my lobby and tell me to call the lady on the letter. He had no idea.