IEIM403400 - Due Diligence: Pre-Existing Entity Accounts: Reportable Accounts: Controlling Persons

Due Diligence: Pre-Existing Entity Accounts: Reportable Accounts: Controlling Persons

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

  1. Whether the account holder is a Passive NFE;
  2. If so, the Controlling Persons of that Passive NFE; and
  3. 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 [see IEIM403380] 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 [see IEIM400820] resident in a Non-Participating Jurisdiction [see IEIM400090]). 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.

Controlling Persons

A Controlling Person is any natural person who has control over an entity, or who is able to use their influence and authority to make decisions on behalf of an entity.

Identifying Controlling Persons

To identify the Controlling Persons, the Financial Institution should follow procedures required by the UK Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and may use information collected and maintained pursuant to those regulations or other 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 pursuant to 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 [see IEIM403140].

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 [see IEIM402780] 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.