(i) The exceptions set out in paragraphs (h)(1)(ii) to (iv) of this Section do not apply to transaction accounts through which a customer of an entity may make payments to third parties or receive payments from third parties. Legal persons, whether domestic or foreign, can be used to facilitate money laundering and other crimes, as their real assets may be hidden. The collection of beneficial ownership information by banks on customers of legal entities can provide law enforcement authorities with important details about suspected criminals who use legal entity structures to conceal their illegal activities and assets. When customers of legal entities seeking access to banks are required to disclose identifying information such as the names, dates of birth, and social security numbers of the people who own or control them, these companies become more transparent and therefore less attractive to criminals and those who support them. You need to verify the identity of the beneficial owners, such as determining that they are who they say they are. However, the final rule does not require you to verify their beneficial ownership status. This means you don`t have to calculate or determine who owns what percentage of the legal entity, and you don`t have to determine whether the company is structured to avoid a 25% ownership threshold. You can rely on the certification provided by the customer, unless you are informed that the customer may provide incorrect information. In this case, you should at least report it to your AML Compliance Officer. Banks may rely on information provided by the legal entity`s customer regarding the identity of its beneficial owner(s), unless they have knowledge of facts that would reasonably call into question the reliability of that information.6See 31 CFR 1010.230(b)(2) Bank employees who know, suspect or have reason to believe that shareholders are attempting to: However, depending on the circumstances, you may need to file a SAR.7 Department of the Treasury, Financial Crimes Enforcement Network (2016), «Customer Due Diligence Requirements for Financial Institutions,» Final Rules (RIN 1506-AB25), Federal Register, Volume 81 (May 11), p. 29410. For more information on RAS submission, see the «Suspicious Activity Reporting Overview» section on page 60 of the FFIEC BSA/AML Review Guide. Banks must put in place procedures to maintain and update customer information, including beneficial ownership information of customers of legal entities, based on risk.
In addition, banks are not required to carry out retrospective checks in order to obtain beneficial ownership information from customers of legal entities that were existing customers on 11 May 2018. However, the bank may need to obtain (and subsequently update) beneficial ownership information for existing customers of legal entities based on its ongoing monitoring. For more information on maintaining and updating customer information, including beneficial ownership information, see the «Ongoing Customer Relationship Monitoring» section of the Customer Due Diligence Overview section of the FFIEC BSA/AML.12 FFIEC, Core Examination Overview and Procedures, Customer Due Diligence Overview, May 2018. A bank does not need to establish the accuracy of every element of the identification information received, but must verify sufficient information to reasonably assume that it knows the true identity of the beneficial owner(s) of the legal entity`s customer. The procedures for verifying the identity of the bank`s beneficial owners describe when it uses documents, non-documentary methods or a combination of methods. Criminals have long used money laundering schemes to hide or «clean» the source of fraudulently obtained or stolen funds. Money laundering poses significant risks to the safety and soundness of the U.S. financial sector. With the rise of terrorists using money laundering techniques to finance their operations, the risk extends to the security of the nation.
Through sound operations, banks play an important role in helping investigative and regulatory authorities identify money laundering companies and take appropriate action.