Beneficial Ownership Rule
Your business relationship is important to us. Our goal is to make the business account opening process an efficient and enjoyable experience for you.
Effective May 11, 2018, all banks will be subject to the new rules under the Bank Secrecy Act enforced by the United States Department of Treasury. This rule is designed to assist the government in the fight against crimes involving terrorist financing, money laundering, tax evasion, corruption, fraud, and other financial crimes or national security threats.
Each time an account is opened for a covered legal entity, Pegasus Bank will be required to collect and verify identifying information (name, address, and tax ID number), as well as personal identification documentation for:
- EACH individual that has 25% or more beneficial ownership in the legal entity; and
- ONE individual that has significant managerial control of the legal entity.
If you are opening an account on behalf of a legal entity, modifying signers on an existing account, or renewing a loan or certificate of deposit, you will be required to provide appropriate documentation and to certify that this information is true and accurate to the best of your knowledge.
In order to make this process as efficient as possible, we suggest that you familiarize yourself with your entity's structure prior to opening/renewing an account, so that you are prepared to provide the necessary identification information (typically, a current driver's license) for each party. All information collected will be handled in accordance with our high privacy standards. We recognize that this new process will be somewhat cumbersome and potentially confusing at first, but be assured that we are here to provide any necessary assistance.
What types of businesses are potentially exempt from these new requirements?
Business clients who fall into one of the categories below are generally exempt from these requirements. However, the Certifying Person may still be required to sign the beneficial owner form to attest the exemption:
- Sole Proprietorships
- Unincorporated Associations (such as scout troops or youth sport leagues)
- Regulated Domestic Financial Institutions, including their holding companies.
- U.S. & U.S. State government entities. A department or agency of the United States, or any State or of any policitical subdivision of a State - e.g. U.S. Department of the Treasury; State of Texas; City of Dallas.
- U.S. publicly traded companies and subsidiaries (51% owned or greater) thereof.
- Securities and Exchange Commission (SEC) registered issuers of securities. An issuer of a class of securities registered under section 12 of the Securities Exchange Act of 1934 or that is required to file reports under section 15(d) of that Act.
- Exchanges and clearing agencies - as defined in section 3 of the Securities and Exchange Act of 1934, that is registered under section 6 or 17A of that Act e.g. NYSE, NASDAQ.
- Securities and Exchange Commission (SEC) registered investment companies - as defined in Section 3 of the Investment Company Act of 1940, that is registered with the SEC under that Act.
- Securities and exchange Commission (SEC) registered investment advisers - as defined in section 202(a)(11) of the Investment Advisers Act of 1940, that is registered with the SEC under that Act.
- CFTC-registered entities. A registered entity, commodity pool operator, commodity trading advisor, retail foreign exchange dealer, swap dealer, or major swap participant, each as defined in section 1a of the Commodity Exchange Act, that is registered with the CFTC.
- Registered Public accounting firms registered under section 102 of the Sarbanes-Oxley Act. e.g. Deloitte, Ernst & Young.
- Trusts (non-statutory business trust). The exclusion would generally cover non-statutory (i.e. created by contract trusts), e.g. Irrevocable trusts, generation skipping trusts, life insurance trusts, etc.
- U.S. State registered insurance companies - e.g. State Farm; GEICO, Cigna.
- Entity registered with the SEC - entity registered with the SEC under the Securities and Exchange Act of 1934.
- Financial Market Utility - A financial market utility designated by the Financial Stability Oversight Council under Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
- Non-US government agency engaged in US governement activities only (non-commercial)-e.g. Federal Reserve Board.
- Pooled investment vehicle operated or advised by a regulated domestic financial institituion.
- Any legal entity whose sole relationship with Pegasus Bank is to finance insurance premiums and for which payments are remitted directly by Pegasus Bank to the insurance provider or broker, without possibility of cash refund.
- Any legal entity whose sole relationship with Pegasus Bank is to finance the purchase or leasing of equipment and for which payments are remitted directly by the financial instituion to the vendor or lessor of this equipment, without possibility of a cash refund.
- Pooled investment vehicle NOT operated or advised by a regulated domestic financial institution.
- Charities. Internal Revenue Code-qualified charities and nonprofit entities in good tax-exempt standing.
For more information related to this new regulatory requirement, you may contact your banking representative or refer to the following https://www.gpo.gov/fdsys/pkg/FR-2016-05-11/pdf/2016-10567.pdf