15.2 Beneficial Ownership, CIP and Ongoing Due Diligence

Beneficial Ownership Requirements for Legal Entity Customers

Subject to entity exemptions and FinCEN’s February 13, 2026 exceptive relief, when a legal entity customer first opens an account at a covered financial institution, the institution must identify and verify the identity of the entity's beneficial owners under two mandatory prongs:

• Beneficial-owner certification: Use FinCEN’s certification form or another permitted method to obtain the required information and the opener’s certification of its accuracy. A signature on FinCEN’s particular form is not universally required.

3. Customer Identification Program (CIP, 31 CFR § 1020.220)

Mandated by Section 326 of the USA PATRIOT Act and codified at 31 CFR § 1020.220, every bank must implement a written, board-approved Customer Identification Program (CIP) appropriate for its size and business type.

The Four Mandatory Identifying Items

Prior to opening any deposit, transaction, or credit account for a "customer" (a person opening a new account), the bank must collect four core data points:

1. Full Legal Name: The individual's legal name, or the registered legal name of an entity;
2. Date of Birth: For an individual (natural person);
3. Physical Street Address:
   • For an individual: A residential or business street address. A P.O. Box alone is strictly impermissible.
   • If the individual lacks a residential street address (e.g., active-duty military or unhoused): An Army Post Office (APO) or Fleet Post Office (FPO) box number, or the residential or business street address of next of kin or another contact individual.
   • For a legal entity or organization: A physical principal place of business, local office, or other physical location.
4. Identification Number:
   • For a U.S. Person: A Taxpayer Identification Number (TIN), consisting of a Social Security Number (SSN) for individuals or an Employer Identification Number (EIN) for entities.
   • For a Non-U.S. Person: One or more of the following: a U.S. TIN, a foreign passport number and country of issuance, an alien identification card number, or the number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.

Verification Procedures: Documentary vs. Non-Documentary

The bank's CIP must establish risk-based procedures to verify the accuracy of the identifying information within a reasonable time after account opening:

• Documentary Verification: Inspecting an unexpired, government-issued photo identification showing nationality or residence (e.g., state driver's license, U.S. or foreign passport, military ID). For entities, reviewing certified articles of incorporation, government-issued business licenses, or partnership agreements.

• Non-Documentary Verification: Contacting the customer, comparing identifying information against independent credit reporting agency files or public verification databases, checking references with other financial institutions, or obtaining financial statements.

• Application Pending Exception: If an individual or newly formed entity has applied for, but has not yet received, a TIN/EIN at account opening, the bank's CIP may allow the account to be opened if the bank obtains official documentation confirming the application filing and establishes controls to ensure the TIN is obtained within a reasonable timeframe.

• CIP government-list check: Compare customers with a list designated by Treasury for this specific CIP purpose when such a list applies. OFAC screening and Section 314(a) searches are separate obligations and do not become the CIP list merely because they are government lists.

4. Comparison Matrix: CIP vs. Beneficial Ownership Requirements

Current beneficial ownership and identification controls

FinCEN’s February 13, 2026 order removes the requirement to identify and verify beneficial owners at every additional account opening. Identification and verification remain required at the first account, when known facts reasonably call earlier information’s reliability into question, and as required by risk-based ongoing diligence. This relief does not eliminate the control prong, ownership prong, monitoring or suspicious activity reporting. Corporate Transparency Act reporting to FinCEN is a separate regime; domestic entity BOI reporting exemptions do not eliminate a bank’s CDD duties.

CIP permits specified exceptions for obtaining an identification number. FinCEN’s June 2025 relief permits banks to obtain a customer’s taxpayer identification number from a third-party source subject to the order’s conditions. An entity does not have an individual date of birth; CIP date of birth applies to individuals. The special government terrorist-list comparison duty applies when Treasury designates a list for that purpose, rather than treating OFAC and Section 314(a) as interchangeable CIP lists. A charity formed as a nonprofit entity may be excluded from the ownership prong but still requires the control prong unless another full exemption applies.

FinCEN CDD relief.