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This may be obtuse, but I am wondering about the definition of principal owner under 1071. What 1071 states is a principal owner is A person who directly owns 25 percent or more of the equity interests of a business. At first glance I think of Beneficial Ownership, but I am now tripping myself up over the word directly. For example: Under Beneficial Ownership – If Company A is owned equally between Companies B & C and they are entities. Each Entity is owned 100% by separate individuals. The Beneficial owners would be the owner of Company B and Company C. Each owning 50%. Does this fall under the definition of direct? or is this indirect?
Thank you in advance for your replies.
In the commentary for the definitions, when it came to principal ownership the CFPB indicated you could utilize some of the practices in place for beneficial ownership. Except that you would only have to get information from “direct” owners they are not expecting you to drill down to a heartbeat unlike beneficial owners for BSA. So the example used would be – individual A owns 50% and ABC inc. owns 50% you only have to get information from the individual. Your example of two entities owning a business has been addressed by them as of yet. Your example provides for a business that I assume they do not consider to be “small” <$5 million in GAR. They continue to update their FAQs so I would recommend that you keep watching to see if they address two businesses instead of just individuals. If I were building the program with out additional guidance, I would make the decision of how far to drill down based off the GAR first. If either of the business in your example had GAR of <$5 million I would get the information collected to avoid them saying my program was circumventing collection. NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege. THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
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