The Financial Crimes Enforcement Network (FINCEN) published a Final Rule requiring more in-depth validation of Beneficial Owners before allowing them to open financial accounts. The rule requires banks, and companies that act on behalf of banks, as ProPay does, to collect the name, date of birth, government identification number, and physical address of anyone deemed a beneficial owner of an entity. This information must be certified by the individual opening the account on behalf of the entity.
Given this government mandate around Beneficial Ownership, ProPay has made changes to its APIs to help our partners collect the required information. The rule took effect on May 11, 2018.
Below is information about who is required to comply and what information is needed.
- A beneficial owner is any person or entity that owns 25% or more of an entity, or any person or entity that practices significant control over the organization (i.e. Chief Operating officer or Managing Director.)
- There can be as many as 5 beneficial owners, however, there must always be at least 1 controlling beneficial owner.
- Financial institutions are required to validate the identities of beneficial owners of companies to ensure they are not part of the OFAC or OSFI lists.
- You must attempt to collect beneficial owner data for any sub-merchant or client partner who you reasonably believe is not a sole-proprietor.
- This data can be passed to ProPay via our API at the time of signup (Methods 4.1.1-4.1.3, or by submitting an account edit* (Method 4.2.6) of the ProPay API. API Manuals are available at www.propay.com/Resources.
- Sole Proprietors, Assumed Sole Proprietors, and other excluded entities are subject to some alternative requirements
- All entities are subject to ‘Know your customer.”
- Entities registered as LLC, who have only one member still fall under the beneficial owner rules.
*As of July 2018, there is a known issue where edits cannot be made without first submitting to ProPay a list of accounts to be updated along with the number of beneficial owners for that account. This can be submitted via this support portal or via email to the Client Support Team.
If you have questions about this process, please contact your account manager or support specialist for additional details.