Which of the following Is Not a Legal Entity Customer

(2) For the purposes of sections 1010.311, 1010.313, 1020.315, 1021.311, 1021.313 and other provisions of this Chapter relating solely to the reporting required under those sections, the term “foreign currency transaction” means a transaction involving the physical transfer of currency from one person to another. A transaction that constitutes a transfer of funds by bank check, cashier`s check, bank transfer or other written order, and that does not involve the physical transfer of currency, is not a foreign currency transaction for that purpose. 28. White House Fact Sheet: U.S. National Action Plan on Preventing the Misuse of Companies and Legal Arrangements (June 18, 2013), available at www.whitehouse.gov/the-press-office/2013/06/18/fact-sheet-us-national-action-plan-preventing-misuse-companies-and-legal. Exceptions in paragraph 1010.230(h). As a general rule, this paragraph exempts the financial institutions concerned from the beneficial ownership requirement with regard to the opening of accounts for clients of legal entities for certain specific activities and under certain restrictions for the reasons described below. One commenter also stated that we misinterpreted how this additional onboarding time would be included in the onboarding process, stating that our view is based on “the simply false assumption that the additional documentation required under the proposed customer due diligence rules can be collected at a (slightly longer) meeting.” Contrary to this view, our estimate of additional time for integration was not based on this assumption. In fact, we understand that, as this commentator noted, “[t]he financial institutions generally offer their customers a 30-day period to collect relevant account opening documents, and the process usually takes more than one meeting.” This characterisation of current practices underscores one of our more general points regarding our expectation that the additional burden on potential customers will be limited after the entry into force of the final Regulation – i.e. it is already true that potential business customers wishing to open accounts with financial institutions often do not have all the necessary documentation (including CIP information).

and that financial institutions have practices in place to inform these potential customers of the documentation they are required to provide to open an account. We anticipate that these existing practices are used and that an institution`s practices for collecting this information for clients of legal entities will not differ materially from those described above. Some commentators have called on FinCEN to exclude smaller financial institutions from coverage, mainly arguing that these institutions generally have a lower risk profile and that the implementation of the beneficial ownership requirement would be excessively burdensome. We categorically refuse to exclude small institutions from the definition of financial institution. As noted in the proposal and above, one of the objectives of this rule is to promote clear and consistent expectations within and within the financial sector in order to promote a more level playing field with respect to money laundering and terrorist financing. The uniform application of the beneficial ownership requirement would prevent the “competitive disadvantage” (cited by one commentator requesting this exclusion) that would result if potential customers were not required to “fill in the same form”. competing financial institutions. And while some smaller institutions are lower risk, size alone should not be a deciding factor for a risk assessment, making it an inappropriate basis for categorical exclusion. Indeed, a blanket exclusion based on size would provide a clear roadmap for illegal actors seeking to easily enter the financial system. Finally, FinCEN appreciates the concerns expressed by commentators about the burden of implementation and, as noted above, has made many changes to the proposal to reduce the burden on financial institutions. We reiterate that financial institutions, such as the CIP, are expected to implement beneficial ownership information collection procedures that are “appropriate to [their] size and nature of the entity.” [78] Commenters asked FinCEN to clarify or define what constitutes a client risk profile, noting that the term is not commonly used in the securities industry.

One commentator noted that while some investment firms assign risk assessments to their clients, this practice is not mandatory and is not widespread in the industry. Therefore, this commentator refused to impose such a categorical requirement. As with banks, the term “customer risk profile” is used to refer to information collected about a customer to establish the baseline against which customer activity is assessed to report suspicious transactions. Depending on the firm and the nature of its business, it may take the appropriate form of individualised risk assessment, classification of clients into risk categories or any other method of assessing client risk. We note that neither federal securities laws nor FINRA rules specifically require firms to establish a formal risk “score” for all clients. However, it is fundamentally expected that industry members understand and be able to demonstrate their clients` risks. As with banks, we do not expect that the client`s risk profile will necessarily be integrated with existing monitoring systems to simultaneously identify and assess suspicious transactions. Rather, we expect broker-dealers to use the client`s risk profile as necessary or appropriately as part of their search and rescue requirements – as we believe is consistent with current general practice – to determine whether a particular transaction is suspicious. Development and implementation of employee training.

Some commentators noted that we did not account for the costs associated with designing and delivering employee training on the new obligations of the CDD rule (as opposed to the costs incurred by financial institutions due to time spent on employee training). that we have included in the AIR). In response to these comments, we have added a new section that includes these costs in the IAA, as described in more detail. (1) establish the identity of all the nominal and beneficial owners of a private bank account; Several commentators representing the commercial insurance premium financing industry submitted a joint letter outlining the expected impact of the beneficial ownership requirement on their industry and the structural characteristics of these financial products, making them a low risk of money laundering. They found that borrowers seeking funds to finance property and casualty insurance premiums do not receive these products directly; Instead, the funds are transferred directly to an insurance company, either directly or through an insurance agent or broker. As with the reserved postage accounts described above, customers of premium finance companies cannot use these accounts to purchase goods, deposit or withdraw money, write cheques, or transfer money. FinCEN agrees that these types of accounts pose a low risk of money laundering, both because of the purpose for which these accounts are created and the characteristics of these accounts that make them a poor vehicle for money laundering. For these reasons, covered financial institutions are exempt from the beneficial ownership requirement in respect of accounts used exclusively to fund insurance premiums and for which payments are transferred directly from the financial institution to the insurance provider or broker. Example 5. H, an individual, arranged with W, a travel agent, to charter a passenger plane to transport a group of people to a sporting event in another city.

H also arranges hotel accommodation with W for the group and for tickets to the sporting event. As a means of payment, H W offers mandates that H had previously purchased. The total amount of the mandates, none of which individually exceed $10,000, exceeds $10,000. Because the transaction is a designated reporting transaction, payment instructions will be treated as a currency for the purposes of Section 5331 and this Section. Since W received more than $10,000 in cash in connection with the transaction, W must prepare the report required under section 5331 and this section. With regard to Alt 6, FinCEN also considered exempting small financial institutions below a certain asset size or with a minimum number of accounts for legal entities. In this context, FinCEN has determined that identifying and verifying the beneficial owner of a financial institution`s legal clients is a necessary part of an effective anti-money laundering program. If FinCEN exempted small businesses or companies that open fewer than a limited number of accounts for legal entities from this requirement, these financial institutions would be more exposed to the risk of abuse by money launderers and other financial criminals, as criminals would identify institutions without this requirement.

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