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Posted on JUN 27, 2018

Beneficial Ownership Rule – Know the Changes Impacting Your Business

At Johnson Financial Group we're always working behind the scenes to stay current with government regulations affecting our customers, and communicating those changes so our clients understand the impact. To comply with the U.S. Treasury's new anti‐money laundering (AML) rules, all financial institutions are required to utilize new certification forms for business entities starting May 11, 2018.

Key points for business clients

Governments around the world are stepping up in the fight against money laundering, terrorist financing and other financial crime, and beneficial ownership rules build on that. The new AML rules, collectively known as the beneficial ownership rule, increases expectations of financial institutions to know and understand who their customers are and monitor trends in transaction patterns. This requires more information from you than it has in the past.

The rule change consists of two main requirements:

  1. Beneficial owners. Legal Entity Customers (LECs) doing business with a financial institution must identify any individuals with 25 percent or more ownership in the business and designate a key manager of the business (one person with significant knowledge of the business ownership structure). This key manager will more than likely also be a beneficial owner. The LEC must provide documentation (e.g., personal IDs) so the financial institution can validate the identities of such individuals. The information is documented on a U.S. Treasury prescribed form each time an account is opened or renewed. Sole proprietorships, government entities, and publicly traded companies are exempt from this requirement.
  2. Customer Due Diligence initiatives. This involves increased regulatory expectations for information gathering and customer AML risk evaluations. Your financial institution is required to know your business owners and understand the types of services you provide, your revenue, number of employees and other data. The purpose of this regulatory focus is to develop customer risk profiles and monitor for suspicious transactions.

What to expect from us

As of May 11, 2018, you'll encounter the new certification forms for beneficial ownership when you open a new account or renew an existing account (including a loan, deposit, safe deposit, wealth or other account). We may reach out to you to gather more information about your business for due diligence purposes. Our goal is to meet the compliance rules while ensuring the smoothest possible experience for our customers.

We understand that additional paperwork requires your time and attention, and we appreciate your cooperation in this effort. Please know that we may be checking in more than usual as we work through the requirements of the new rules. If you have questions or concerns about the new beneficial ownership rule, please contact your relationship manager.