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Mar 2018
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March 19, 2018

Financial Institutions Set to Implement Additional Customer Information Requirements for Business Entities

A newly effective federal rule will require business entities to provide additional information when opening a new account at certain financial institutions. Beginning May 11, 2018, banks, broker-dealers, mutual funds, and futures commission merchants and introducing brokers will be required to implement additional customer information requirements. In order to comply with the requirements, financial institutions will require business entity customers, including corporations, limited liability companies, and partnerships, among others, to identify individuals who own and control the business entity. 

Specifically, business entity customers will be asked to identify the following: 
 
  • Each natural person that directly or indirectly owns 25% or more of the equity interests of the business entity (up to four individuals and as few as zero); and
  • At least one natural person with “significant responsibility to control, manage, or direct” the business entity (e.g., a Chief Executive Officer, Managing Member, General Partner, or President). 

Additionally, business entity customers will be asked to verify the identity of the identified persons, likely by providing certain documentation (e.g., unexpired government-issued photo identification). 

The identification requirements will apply to new accounts opened by business entity customers on or after May 11, 2018, including existing customers opening new accounts. Business entity customers with existing accounts may also be asked to provide identification and verification information in order to allow the financial institution to update customer records.
 
For questions concerning customer information requirements, please contact Rodney Martin, Ryan Richter or any member of the Warner Norcross + Judd Financial Services Group.

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