103400 – Due Diligence: Entity Accounts: Review Procedure for Controlling Persons

When a financial institution has determined that an Account Holder is an NFE it must carry out review procedures to determine:

a. Whether the Account Holder is a passive NFE;

b. If so, the Controlling Persons of that passive NFE; and 

c. Whether any of the Controlling Persons is a Reportable Person.

Is the Account Holder a passive NFE?

The financial institution must obtain a self-certification from the Account Holder unless it has information in its possession, or that is publicly available, based on which it can reasonably determine the status of the Account Holder as an active NFE or a financial institution (other than a managed investment entity resident in a non-Participating Jurisdiction ). If the financial institution cannot determine the status of the Account Holder as an active NFE or a financial institution, then the financial institution must presume the Account Holder to be a passive NFE.

Identifying Controlling Persons.

To identify the Controlling Persons, the financial institution may rely on information collected and maintained under AML/KYC procedures.

Are any of the Controlling Persons a Reportable Person?

If the account balance or value does not exceed an amount equivalent to $1million, the financial institution may rely on information collected and maintained under AML/KYC procedures to determine whether the Controlling Person is a Reportable Person or it may choose to obtain a self-certification from the Account Holder or the Controlling Person.

If the account balance exceeds an amount equivalent to $1million the financial institution must obtain a self-certification from either the Account Holder or the Controlling Person. This may be provided in the same self-certification as the one provided by the Account Holder to determine its own status. The self-certification requirements are the same as for New Individual Accounts.

If a self-certification is required but is not obtained the financial institution must rely on the electronic record search for pre-existing individual accounts to determine if there are indicia present that can be used to determine the reportable status of the Controlling Person. If none is present in its records, the financial institution need take no further action unless and until there is a change of circumstance with respect to the Controlling Person.