Upcoming System Outage for Scheduled Maintenance:

April 14, 2024 Read More

USA Patriot Act Important Information About Opening a Legal Entity (Business) Account

Effective May 11, 2018, Federal Regulation requires Rally Credit Union to implement opening procedures for all Business Accounts. The rule includes provisions that address identifying the beneficial owners of legal entity accounts.

What is it?

The Financial Crimes Enforcement Network (“FinCEN”) issued the Customer Due Diligence (CDD) rule to amend existing regulations in order to clarify and strengthen CDD requirements for certain financial institutions. The CDD rule outlines explicit customer due diligence requirements and imposes a requirement to identify and verify the identity of beneficial owners of “legal entity” customers. Beneficial owners are individuals who fit within at least one of the following “prongs”:

  1. Any individual who, directly or indirectly, owns 25% or more of the legal entity customer; and
  2. One individual who has “significant responsibility to control, manage, or direct the legal entity”.

For example:

For CDD the “legal entity customer” includes:

The definition of “legal entity customer” does NOT include:

Rally may still need to identify an individual that has significant control of an entity in certain situations. This includes religious organizations, charities, and non-governmental organizations.

Will I need to provide the required information on accounts that I already have?
The CDD rule is not retroactive so it will primarily involve new accounts opened with Rally. However, we will have to obtain the required information on existing accounts when changes are made to the accounts (CD renewal, etc.).

Who does the rule impact?
Covered financial institutions. Specifically, the rule covers federally regulated banks, federally insured credit unions, mutual funds, brokers or dealers in securities, futures commission merchants, and introducing brokers in commodities.

Why do we have to do it?
Since we are a covered financial intuition, Rally is required to comply with the rule.

Additional Resources
For more information about the CDD rule, please review the FinCEN FAQ regarding Customer Due Diligence Requirements.

We proudly support all efforts to protect and maintain the security of our members and our country.