In our view, it would be prudent to list the executor of the estate as a beneficial owner of the corporation and to obtain the executor’s identifying information, although you are not required to do so.

FinCEN’s customer due diligence (CDD) rule generally requires a financial institution to collect information about each individual who owns 25% or more of a legal entity customer (the “ownership prong”) and to collect information about a single individual with significant responsibility to control a legal entity customer (the “control prong.”) “Legal entity customers” include corporations and other business entities and do not include probate estates or trusts (other than statutory trusts created by a filing with a Secretary of State or similar office). However, in this situation, the customer is a legal entity (a corporation), and consequently your bank must collect information under both the ownership and control prongs.

The CDD rule addresses entities that are owned by trusts, but not entities owned by probate estates. For trusts that own 25% or more of a legal entity customer, the trustee is considered a beneficial owner under the ownership prong of the CDD rule. Although there is no formal guidance covering a situation in which a probate estate owns 25% or more of a legal entity customer, we believe this situation is analogous to a trust’s ownership of a legal entity customer. Consequently, when a probate estate owns 25% or more of a legal entity customer, we recommend listing the estate’s executor — in their capacity as executor — as a beneficial owner. We also recommend collecting the executor’s identifying information to verify their identity.

We checked with FinCEN regarding businesses owned by probate estates (without using your name or the bank’s name), and their response suggests that an executor of an estate is not necessarily the “beneficial owner” of a business owned by the estate. They acknowledged in an email that “that final rule does not address this type of scenario” and that “being an executor of an estate in itself does not necessarily define a person as a beneficial owner, as it would depend on that individual’s ownership interest in the legal entity customer.”

However, in the absence of formal guidance, we would take the conservative position of treating the estate’s executor as a beneficial owner of the business. FinCEN’s email also stated that “since there is currently not any formal guidance on this topic, you may treat this scenario in a similar manner as trusts, as outlined in FAQ 19 of the CDD FAQs, if you wish to do so.” FAQ 19 reflects the CDD rule’s treatment of a trustee as a beneficial owner under the under the ownership prong when a trust owns 25% or more of a legal entity customer.

FinCEN also noted that you may wish to submit a request for an administrative ruling on this matter. The request must include, among other things, a complete description of the situation for which a ruling is requested, a complete statement of all material facts, a concise and unambiguous question to be answered, and a statement that the question to be answered is not subject to an ongoing proceeding. The request should be mailed to FinCEN at the address listed in the resources.

For resources related to our guidance, please see:

• 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, including:

• (i) An executive officer or senior manager (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer); or
• (ii) Any other individual who regularly performs similar functions.

(3) If a trust owns directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, 25 percent or more of the equity interests of a legal entity customer, the beneficial owner for purposes of paragraph (d)(1) of this section shall mean the trustee. If an entity listed in paragraph (e)(2) of this section owns directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, 25 percent or more of the equity interests of a legal entity customer, no individual need be identified for purposes of paragraph (d)(1) of this section with respect to that entity’s interests.”)

• FinCEN Customer Due Diligence Rule, 31 CFR 1010.230(e)(1) (“Legal entity customer means a corporation, limited liability company, or other entity that is created by the filing of a public document with a Secretary of State or similar office, a general partnership, and any similar entity formed under the laws of a foreign jurisdiction that opens an account.”)

• FinCEN Final Rule, Customer Due Diligence Requirements for Financial Institutions, 81 Fed. Reg. 29397, Footnote 58 (“Also not covered by the final rule are accounts in the name of a deceased individual opened by a court-appointed representative of the deceased’s estate.”)

• FinCEN FAQs Regarding Customer Due Diligence Requirements for Financial Institutions (April 3, 2018) (“Question 19: When 25 percent or more of the equity interests of a legal entity customer are owned by a trust that is overseen by co-trustees (multiple trustees), are covered financial institutions required to identify and verify the identity of all co-trustees? No. If a trust owns directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, 25 percent or more of the equity interests of a legal entity customer, the beneficial owner under the ownership/ equity prong is the trustee. Where there are multiple trustees or co-trustees, financial institutions are expected to collect and verify the identity of, at a minimum, one co-trustee of a multi-trustee trust who owns 25 percent or more of the equity interests of a legal entity customer that is not subject to an exclusion. A covered financial institution may choose to identify additional co-trustees as part of its customer due diligence, based on its risk assessment and the customer risk profile and in accordance with the institution’s account opening procedures.”)

• FinCEN Customer Due Diligence Rule, 31 CFR 1010.711(d) (“Requests shall be addressed to: Director, Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183.”)

• FinCEN Customer Due Diligence Rule, 31 CFR 1010.711(a) (“Each request for an administrative ruling must be in writing and contain the following information:

(1) A complete description of the situation for which the ruling is requested,

(2) A complete statement of all material facts related to the subject transaction,

(3) A concise and unambiguous question to be answered,

(4) A statement certifying, to the best of the requestor's knowledge and belief, that the question to be answered is not applicable to any ongoing state or Federal investigation, litigation, grand jury proceeding, or proceeding before any other governmental body involving either the requestor, any other party to the subject transaction, or any other party with whom the requestor has an agency relationship,

(5) A statement identifying any information in the request that the requestor considers to be exempt from disclosure under the Freedom of Information Act, 5 U.S.C. 552, and the reason therefor,

(6) If the subject situation is hypothetical, a statement justifying why the particular situation described warrants the issuance of a ruling,

(7) The signature of the person making the request, or

(8) If an agent makes the request, the signature of the agent and a statement certifying the authority under which the request is made.”)