Yes, your bank is required to obtain information about the individuals who control the nonprofit corporation.

Under the new customer due diligence final rule, banks are required to obtain and verify information at account opening about the beneficial owners of legal entity customers, which typically includes information about both those who own (the “ownership prong”) and those who control the legal entity (the “control prong”). Although nonprofit corporations that have filed organizational documents with the appropriate state authority are exempt from the ownership prong, the exemption does not extend to the control prong. Consequently, banks must obtain information about those who exercise control over nonprofit legal entity customers as part of their account opening procedures.

For resources related to our guidance, please see:

• FinCEN Customer Due Diligence Rule, 31 CFR 1010.230(a) (“Covered financial institutions are required to establish and maintain written procedures that are reasonably designed to identify and verify beneficial owners of legal entity customers and to include such procedures in their anti-money laundering compliance program required under 31 U.S.C. 5318(h) and its implementing regulations.”)

• FinCEN Customer Due Diligence Rule, 31 CFR 1010.230(d) (“For purposes of this section, beneficial owner means each of the following: (1) Each individual, if any, who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25 percent or more of the equity interests of a legal entity customer; and (2) A single individual with significant responsibility to control, manage, or direct a legal entity customer. . . .”)

• FinCEN Customer Due Diligence Rule, 31 CFR 1010.230(e)(3)(ii) (“The following legal entity customers are subject only to the control prong of the beneficial ownership requirement: . . . . 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.”)

• Final Rule, Customer Due Diligence Requirements for Financial Institutions, 81 Fed. Reg. 29397, 29416 (May 11, 2016) (“FinCEN has determined that it would be simpler, as well as more efficient and more logical, to exclude all nonprofit entities (whether or not tax-exempt) from the ownership prong of the requirement, particularly considering the fact that nonprofit entities do not have ownership interests, and require only that they identify an individual with significant responsibility to control, manage, or direct the customer. Accordingly, the final rule eliminates this proposed exclusion and instead includes as a type of legal entity customer, subject only to the control prong of the beneficial owner definition, 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.”)