Pub. 15 2018 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S 18 T here have been a lot of questions on the various 2018 rules but one of the two (looking at you, HMDA!) that the Compliance Alliance hotline gets the most questions on is the Beneficial Ownership Rule. And the number one question? “Can someone please explain this to me in plain English?!” It’s a fair question so it’s time to break down this rule by going step-by-step. Step 1: Who Does This Rule Apply to? The rule applies to “Legal Entities” as defined by the rule. So even if you’re used to thinking about family trusts and estates as a “legal entity” because they are separate from the individu - als involved with them and they are created by state law, that’s not the defining trait of a “legal entity”. The defining trait is an organization that is created by registering with the Secretary of State (or whatever your state’s registration agency is called) as a business that is separate from the individual(s) running it. So for example, a sole proprietorship wouldn’t meet that defini - tion but a sole member LLC would. Likewise, a family trust would not meet definition but a business trust that is set up by registering with the Secretary of State would. So, you have a legal entity, you continue to step 2, if not, you follow your regular CIP steps. Beneficial Ownership: Step by Step By Silvia Garcia Maggio, CRCM, Associate General Counsel, Compliance Alliance