Compliance Alliance Question of the Week
Is a volunteer fire department fully exempt from obtaining beneficial ownership or would it require just the Control prong?
It depends on whether the fire department is a government entity or a non-profit. Governmental units are entities set up by federal, state, or local law.
If the fire department is a government entity, then it would be exempt under 31 CFR 1010.230(e)(2).
"(2) Legal entity customer does not include:
(i) A financial institution regulated by a Federal functional regulator or a bank regulated by a State bank regulator;
(ii) A person described in §1020.315(b)(2) through (5) of this chapter;"
And 1020.315(b)(2) states:
"b) Exempt person. For purposes of this section, an exempt person is:
(1) A bank, to the extent of such bank's domestic operations;
(2) A department or agency of the United States, of any State, or of any political subdivision of any State;
(3) Any entity established under the laws of the United States, of any State, or of any political subdivision of any State, or under an interstate compact between two or more States, that exercises governmental authority on behalf of the United States or any such State or political subdivision;"
If instead, the fire department is a non-profit, then it would be subject to only the control prong under 31 CFR 1010.230(e)(3).
"(3) The following legal entity customers are subject only to the control prong of the beneficial ownership requirement:
(i) A pooled investment vehicle that is operated or advised by a financial institution not excluded under paragraph (e)(2) of this section; and
(ii) Any legal entity that is established as a nonprofit corporation or similar entity and has filed its organizational documents with the appropriate State authority as necessary."
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