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FinCEN Customer Due Diligence FAQ


On May 11, 2016, the U.S. Financial Crimes Enforcement Network (FinCEN) issued the Beneficial Owner Final Rule (a.k.a. the “Customer Due Diligence Requirement”) which requires covered financial institutions to identify and verify the identity of all individuals who own or control a privately owned legal entity at the time a new account is opened.


Effective May 11, 2018, per the Beneficial Owner Final Rule, Forte will be required to collect the following information from the owner in control of the legal entity (Control Owner) and up to four Beneficial Owners with 25% or more legal ownership:

  • Legal Name
  • Date of Birth
  • Street Address (Residential or Business)
  • Social Security Number
  • Country and Citizenship


Customer Due Diligence FAQ


Q. Who does this rule apply to?

The FinCEN  Beneficial Ownership rule applies to “Covered Legal Entities” which include:

· Corporations

· Limited Liability Companies

· Limited Partnerships

· General Partnerships

· Business Trusts

· Any other entity created by a filing with a state office

· Any similar entities formed under the laws of a non-U.S.  jurisdiction


Q. Who is exempted?

The following  type of entities are exempted from the Beneficial Ownership requirements:

· Association/Estate/Trust accounts

  • Federal/State/Local accounts
  • Individual/Sole Proprietorships
  • Publicly Traded Corporations
  • SEC Registered Companies (e.g. Investment advisors/CO, exchange/clearing, etc.)

Limited exemptions: Charities and Nonprofit entities are not required to provide identification information for Beneficial Owners of the legal entity. However,  information regarding an individual with significant responsibility to control,  manage, or direct the entity customer must be provided.

 

Q. Who is a  Beneficial Owner?
  A beneficial owner is each individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, owns 25% or more of the equity interest in the legal entity.

Q. Who is a Control Owner? 
  A control owner is an individual with significant responsibility to control,  manage, or direct a legal entity, such as an executive officer or senior  manager (e.g. a Chief Executive Officer, Chief Financial Officer, Chief Operating  Officer, Managing Member, General Partner, President, Vice President, or  Treasurer) or any individual who regularly performs a similar function.

Q. What if the owner is another corporation? 

  We are obligated to collect the information of an individual owner, not a legal entity. In some instances, we will need to collect the information of the beneficial ownership of the owning corporation.

Q. Are credit checks conducted on Beneficial Owners? 
  Credit checks are conducted on the Guarantors.  If a Control  Owner/Beneficial Owner is also a Guarantor, the credit check is conducted on them in that capacity. Otherwise, Forte will only run a credit check on the primary/control owner on the account and validate the information on the beneficial owners by performing OFAC and AML screens.

Q. What information needs to be collected for the Control Owner and the  Beneficial Owner?
  Forte will be required to collect the name, address, date of birth, SSN, owner country, and owner citizenship.

Q. Do we need to validate the Control Owner or Beneficial Owner requirement?
  No.  We are only required to collect it.

Q. Do we need to get this information on existing merchants? 
  Generally, no. However, there will be certain events (change of ownership,  negative news, periodic risk review) that may trigger the collection of this information for existing accounts.

Q. Does there have to be a beneficial owner?   
  Depending on the structure of the entity, there may not be any beneficial owners that meet the criteria. It is entirely possible that there could be an entity with only the mandatory Control Owner.

Q. What if the Control Owner/Beneficial Owner does not have a SSN? 
  In the event that someone does not have a SSN/ITIN or US Government issued ID,  Forte will need to collect a unique ID from the issuing government; this may include a passport number from the country of issuance.

Q. How will the Forte applications be updated? 
  The Vantiv paper application has been updated with additional fields/spaces for the Control Owner and up to 4 beneficial owners with the percentage of ownership. The new application can be found here.

 

The REST API has also been updated to capture the additional Control  Owner and Beneficial Owner information. Updated REST API documents can be found here.


Q. Will the additional data fields be treated as required fields on the Forte application? 
  Yes. The additional fields on the REST API will initially be captured as optional fields. However, partners are still required to capture this information on all new applications to avoid onboarding delays. After 90 days,  Forte will update the API to make the additional data points required fields.

Q. What happens if an application is submitted without the additional data? 

  This is a federal requirement and therefore any new accounts other than those exempted must provide this information. Effective  May 11, 2018, Forte will reject any applications that do not meet this requirement. Applications generated through the REST API after the additional fields become required fields will receive an error.

Q. Will Forte provide the same pricing options on Vantiv as currently provided on Global?
  Currently, Forte supports flat fee and interchange plus pricing models on  Vantiv. Forte also plans to support tiered pricing on other platforms besides  Global Payments by end of Q2 2018. If you currently board merchants on Global,  please contact your Account Manager for comparable pricing on Vantiv.

Q. How should I submit applications if I currently use the Global online application?
  The Global online application links will be deactivated effective May 11, 2018.  Partners will need to submit the updated Vantiv paper applications or contact  Forte to obtain new application links.

Q. Will Forte provide notice once these changes have been implemented?
  Yes. Forte will send one or more reminders leading up to the May 11, 2018  deadline.

Q. Can partners request an extension?
  No. Because this is a federal requirement, Forte is required to comply with the final rule in order to avoid any penalties.

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