As Ellen Lafferty explains in this podcast and in the new edition of The Complete Compliance and Ethics Manual, financial institutions must have procedures to determine both control and ownership. Each natural person who owns 25% or more of the legal entity must be identified. So, too, at least one individual who controls the organization must be found. That See more +

As Ellen Lafferty explains in this podcast and in the new edition of The Complete Compliance and Ethics Manual, financial institutions must have procedures to determine both control and ownership. Each natural person who owns 25% or more of the legal entity must be identified. So, too, at least one individual who controls the organization must be found. That information then must be verified using a risk-based procedure.

The verification must be obtained at the time new account are open, but there are exceptions. These are for entities whose ownership and management are available via other means: financial institutions regulated by a federal regulator, banks regulated by a state, and publicly traded companies since the ownership and control information can already be found easily.

She goes on to explain that when it comes to UBO, there are a number of areas that compliance teams need to be sensitive to. First, is whether or not to take the prospective customer at his or her word. It’s okay to take a risk-based approach, but there should be well-documented policies and procedures. There is also a need for an escalation procedure when the customer isn’t providing the information you need.

Listen in to learn more, or preview this chapter from The Complete Compliance and Ethics Manual.

(https://compliancecosmos.org/customer-due-diligence-and-beneficial-ownership) See less -