12 Days of BSA

12 days

On the ... day of BSA, my League gave to me...

1st day...

What is a beneficial owner?

A beneficial owner is a person who owns 25% or more equity interest (at a minimum), and/or has a significant responsibility to control the business.

An example of an equity owner interest might be a "silent" partner, owning at least 25% of the business.

An example of "control" interest might be any senior management position.

2nd day...

What is a legal entity? (In simple terms.)

The rule defines legal entities as:
  • Corporations

  • Limited-liability companies

  • Other entities that are created by filing a public document with a Secretary of State or similar office

  • General partnerships or other similar business entities formed in the United States or a foreign country.


A legal entity DOES NOT include:
  • Sole proprietorships,

  • Unincorporated associations (such as, Scout Troops and youth sports leagues),

  • Natural persons opening accounts on their own behalf.


Source: CUNA

3rd day...

What is the definition of a person who meets the control criteria and do I need to identify this person as well?

Someone with control criteria is an individual with significant responsibility to control, manage or direct the legal entity, such as CEO, CFO, VP or other member of the senior management team. At least one individual must be identified for the control prong of beneficial ownership.

4th day...

What must credit unions do to comply with the Bank Secrecy Act and what is now considered the 5th Pillar of it?

  1. Implement Internal Controls

  2. Provide Training

  3. Perform Independent Testing

  4. Designate a BSA officer

  5. EFFECTIVE MAY 11, 2018, appropriate risk-based procedures for conducting ongoing legal entity member due diligence

The 5th Pillar is in direct relation to credit unions who open and administer business accounts.

5th day...

Who is exempt from the definition of a legal entity?

There are a number of certain entities that are excluded from the definition of legal entity and beneficial ownership information is not required. They include the following:
  • Financial Institutions governed by the Federal Government, or State regulator;

  • A department or agency created by the US Government, or any State, or subdivision of a state;

  • Any entity that trades on the New York, American, or NASDAQ stock exchange;

  • Any entity organized in the US with 51% or its stock held by a listed entity;

  • Issuers of securities under Section 12 of the Securities Exchange Act, or that is required to file reports under 15(d) of the Act;

  • Investment Companies, as defined in Section 3 of the Investment Company Act of 1940;

  • An SEC- registered investment adviser;

  • An exchange or clearing agency registered under the Security Exchange Act;

  • Any other entity registered with the Securities Exchange Commission under the Security Exchange Act;

  • A registered entity under the Commodity Exchange Act;

  • A public accounting firm registered under section 102of the Sarbanes-Oxley Act;

  • A bank holding company;

  • A pooled investment vehicle operated or advised by a financial institution;

  • An insurance company;

  • A financial market utility designated under Title VIII of the Dodd-Frank Act;

6th day...

What form do I use to collect beneficial ownership information? Do I have to use their form to obtain Beneficial Ownership data from the member?

There is not a requirement to use a specific form, however, there is one available and it is very easy you use. You can also create your own form. This is the form that the NCUA has provided:

CDD Certification Form (PDF-Fillable)

7th day...

Are credit union's required to examine their current business accounts members, and retroactively require that beneficial ownership forms be completed?

No, credit unions are not required to conduct any reviews of current accounts. However, should a new account under that current business relationship be established (ex. new certificate), then beneficial ownership would be required.

8th day...

Am I required to update the beneficial ownership information on accounts regularly?

No, this rule is event-driven. As long as nothing changes, for instance, some unusual account activity, or an opening of a new account (sub-account), then you are not required to collect or update the information.

9th day...

Collection of Beneficial Ownership Information: What address should be obtained for a legal entity's beneficial owner?

The standard set in your Customer Identification Program for obtaining a residential or business address, versus a PO Box, still applies.

10th day...

Is a customer notice (lobby notice or desk notice) required to inform customers about the beneficial ownership requirements?


Despite what some vendors may tell you, there is no requirement for a lobby notice or to even "update" your original notice. If you tried to change your lobby notice, it would probably cause more confusion.

11th day...

Do estates fall under the Beneficial Ownership Rule?


No; Using the definition of legal entity member, this type of account would not include estates or trusts.

12th day...

What document will the examiners use to review during my next exam?


As of April 25, 2018, the NCUA has not approved a set of procedures for examiners to test a credit union's adherence to the May 11th deadline for changes in customer/member due diligence and beneficial ownership.

Once a process has been approved, it will be posted on the www.ncua.gov website.

 

Kentucky Credit Union League
3615 Newburg Rd.
Louisville, KY 40218

Call: 502-459-8026 or 800-333-5285
Fax: 502-459-0189
Email: kycul@kycul.org