Whether a community college is exempt from FinCEN’s customer due diligence requirements, including the requirement to collect a certification form, depends on the specific community college.
If the community college is a public institution that has the power to tax (for example, some community colleges in Illinois have the power to levy property taxes), we believe it may qualify for an exemption from FinCEN’s customer due diligence requirements, which do not apply to entities that are established under the laws of a state and that “exercise governmental authority” — such as levying taxes.
On the other hand, if the community college is a private entity, it will not qualify for a full exemption from FinCEN’s customer due diligence requirements. If the community college is a private nonprofit corporation, it will qualify for a partial exemption from the general requirement to collect information about both those who own (the “ownership prong”) and those who control the customer (the “control prong”); nonprofit corporations are exempt from the ownership prong, and only the control prong applies. However, if the community college is a private for-profit corporation, it will be subject to both the ownership and control prongs of the customer due diligence rules.
For resources related to our guidance, please see:
- FinCEN Customer Due Diligence Rule, 31 CFR 1010.230(b) (“With respect to legal entity customers, the covered financial institution’s customer due diligence procedures shall enable the institution to: (1) Identify the beneficial owner(s) of each legal entity customer at the time a new account is opened, unless the customer is otherwise excluded pursuant to paragraph (e) of this section or the account is exempted pursuant to paragraph (h) of this section. . . .”)
- FinCEN Customer Due Diligence Rule, 31 CFR 1010.230(g) (“For the purposes of this section, new account means each account opened at a covered financial institution by a legal entity customer on or after the applicability date [May 11, 2018].”)
- FinCEN Customer Due Diligence Rule, 31 CFR 1010.230(e)(2)(ii) (“Legal entity customer does not include: . . . (ii) A person described in § 1020.315(b)(2) through (5) of this chapter; . . .”)
- FinCEN Regulations, 31 CFR 1020.315(b) (“(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
- FinCEN Regulations, 31 CFR 1020.315(e)(2) (“. . . An entity generally exercises governmental authority on behalf of the United States, a State, or a political subdivision, for purposes of paragraph (b)(3) of this section, only if its authorities include one or more of the powers to tax, to exercise the authority of eminent domain, or to exercise police powers with respect to matters within its jurisdiction. Examples of entities that exercise governmental authority include, but are not limited to, the New Jersey Turnpike Authority and the Port Authority of New York and New Jersey.”)
- Public Community College Act, 110 ILCS 805/1-2 (“‘Community Colleges’: Public community colleges existing in community college districts organized under this Act, or public community colleges which prior to October 1, 1973, were organized as public junior colleges under this Act, or public community colleges existing in districts accepted as community college districts . . . which districts levy a tax for community college purposes.”)
- 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: . . . (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.”)