Pub. 7 2017-2018 Issue 4

4 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S 2018 Serving Up a Platter Peppered With New Small Business Loan Questions Chairman’s Message N ext year, silent business partners will become a thing of the past for business owners seeking fi - nancial services from traditional banks. Under strengthened federal An- ti-Money Laundering laws, financial institutions, when dealing with corpo- rations and businesses, will be required to identify all “beneficial owners” of the entity, as well as the individual who will control any and all accounts. The law defines a beneficial owner as anyone who owns, directly or indirectly, at least a 25 percent stake in a business. Explaining the push for this new requirement, the Financial Crimes Enforcement Network (FinCen) wrote, “In account relationships, this provides another tool for financial institutions to better understand and address money laundering and terrorist financing risks, protect themselves from criminal ac- tivity, and assist law enforcement with investigations and prosecutions.” Further, business owners, beginning in May if not sooner, will be required to provide certified personal information about anyone who owns at least a 25 percent stake in the business– even if the stakeholder is not the bank’s direct customer. This applies to loans as well as operating accounts. “Heightened risks can arise with respect to beneficial owners of accounts because nominal account holders can enable individuals and business entities to conceal the identity of the true owner of assets or property derived from or associated with criminal activity,” Fin - Cen added. What’s more: the bank will have to reverify such information every time an existing customer adds an account or takes out a subsequent line of credit. The financial institution will be required to keep the information on file. This change may prove frustrating and feel intrusive to business owners who have never before been required to provide information about their financ - ing partners, but it’s the law. It’s important as bankers that we help our customers clearly understand why this change is happening – banks are being forced to ask these questions – in addition to the other 13 new data points banksmay soon be required to collect on. Section 1071 of the Dodd-Frank Act requires financial institutions to com - pile, maintain, and report information concerning credit applications made by women-owned, minority-owned, and small businesses. It specifically directs financial institutions to compile 13 sep - arate data points that also include the amount of funding sought and approved, the type and purpose of the financing, as well as the location and most recent annual revenue of small business ap- plicants. Bankers have balked at the rule, citing compounding existing regulatory and paperwork burdens, adding that the benefits of collecting such data is unclear. Further, doing so could divert critical resources to the detriment of job and economic growth and could generate privacy concerns for our customers as banks would be required to make the collected information public. A comment period on the proposal closed in September after being ex- tended from May. In November, federal legislation was introduced seeking to do away with the rule. While the outcome remains to be seen, we must continue to advocate for rules that do not disproportion- ally affect one banking sector over another, or that hamper our abili- ty to do what we do best: prudently help our customers realize dreams. n Mark Driscoll First National Bank of Fort Collins 2017-2018 CBA Chairman