Any C.O. issues with new 'Know Your Customer' regs??

[T113Alexandria]

Hi all, 

New member here. I'm a Troop Committee Chairman and am in the process of trying to on-board a new treasurer. The former treasurer has been with the troop for years (finishing up third son's Eagle). So to bring on the new treasurer, we all go to our bank and ask to update  the account's signatories. I needed to add my name to the account (which I've neglected for some time) and add the new treasurer and remove the out-going treasurer. Now I was expecting this to require some paperwork, but we were also hit with a brand new "beneficial ownership form," which requires a "responsible person" from our charter organization to provide personal information (SSN, copy of ID card, etc.). The form basically identifies this person as the owner of the account. (We currently use our chartering organization's EIN for the account and have for years.) The chartering organization is balking at providing the information. There is some confusion. It's a new form. Not sure who should be on it. Etc.

The bank tells me this is a new form required by implementation of new "know your customer" regulations that were drawn up from the Patriot Act.

That's a pretty long wind up for this question: Has anyone else encountered these new bank regulations/forms? How did you deal with them?  Should the Troop get its own EIN or would that even make a difference if the chartering organization is still the owner of our assets?

Thanks for any confirmations, affirmations or guidance :)

Dan in Alexandria, VA

[NJCubScouter]

T113Alexandrai, welcome to the forum!

I have never heard of this, but I have never been directly involved with the troop's banking.  It sounds to me like the bank is confusing an account for an organization with an account for an individual, but anything is possible.  I know that our troop uses the CO's EIN number.

[qwazse]

@T113Alexandria, welcome to the forums and thanks for your service to our boys.

Yes, banks can get pretty funny with this stuff. The CO just needs to vouch that you all aren't among our nation's sworn enemies. Ours did. (Can't remember if the COR or IH signed for us.)

[T113Alexandria]

The bank manager told me this is now a requirement for all business (nonpersonal) accounts.

According to my limited research it appears to only affect new accounts, or individuals starting a new relationship with the bank. That is, we did not open a new account, but because the new treasurer and I were starting new relationships by being added to the account, we had to fill out this form.

So, heads up, other troops will likely encounter this when they add new people to an account. 

[NJCubScouter]

If the CO says they won't do it, you might check with your council about what to do next.  I am not assuming that they will necessarily have a helpful answer for you, but it's worth a try.

[Hawkwin]

4 hours ago, T113Alexandria said:

Hi all, 

New member here. I'm a Troop Committee Chairman and am in the process of trying to on-board a new treasurer. The former treasurer has been with the troop for years (finishing up third son's Eagle). So to bring on the new treasurer, we all go to our bank and ask to update  the account's signatories. I needed to add my name to the account (which I've neglected for some time) and add the new treasurer and remove the out-going treasurer. Now I was expecting this to require some paperwork, but we were also hit with a brand new "beneficial ownership form," which requires a "responsible person" from our charter organization to provide personal information (SSN, copy of ID card, etc.). The form basically identifies this person as the owner of the account. (We currently use our chartering organization's EIN for the account and have for years.) The chartering organization is balking at providing the information. There is some confusion. It's a new form. Not sure who should be on it. Etc.

The bank tells me this is a new form required by implementation of new "know your customer" regulations that were drawn up from the Patriot Act.

That's a pretty long wind up for this question: Has anyone else encountered these new bank regulations/forms? How did you deal with them?  Should the Troop get its own EIN or would that even make a difference if the chartering organization is still the owner of our assets?

Thanks for any confirmations, affirmations or guidance

Dan in Alexandria, VA

I work in finance and KYC laws are retroactive as it pertains to changes to existing accounts. In other words, existing accounts only require the new documentation when you try to make a change to them, as you did. It is not uncommon for entity accounts to require additional documentation to prevent fraud and money laundering.

https://fin.plaid.com/articles/kyc-basics

The beneficial owner issue is somewhat more new.

http://www.bankerstoolbox.com/wp-content/uploads/wpaper_CDD_newrule_takeaways.pdf

As expected, with the new rule, financial institutions will be required to establish and maintain written procedures

that incorporate the identification of beneficial owners of legal entity customers into their AML compliance

program.

[T113Alexandria]

Thanks Hawkwin, very helpful.

If I am understanding the information in the Takeaways PDF correctly, I as the troop committee chairman can claim beneficial ownership under the control prong because I have oversight and control of the troop's accounts. And our charter organization, being a church, and therefore exempt from the ownership prong, is not required to be included in the reporting.

We therefore wouldn't need to get an individual from the church to give us their personal information. I could provide my information.

Is that right?

And, for this to be so, should the troop get its own EIN just to keep it separate from the church?

Edited July 12, 2018 by T113Alexandria

[Hawkwin]

27 minutes ago, T113Alexandria said:

 

Is that right?

 

As I understand it, yes, but each financial institution will implement these laws in their own way. Unfortunately, a lot of laws like this are unnecessarily vague as to how they are to be implemented (which is why so many companies either overdue it to CYA or end up paying fines for underdoing it).

[CalicoPenn]

20 minutes ago, T113Alexandria said:

Thanks Hawkwin, very helpful.

If I am understanding the information in the Takeaways PDF correctly, I as the troop committee chairman can claim beneficial ownership under the control prong because I have oversight and control of the troop's accounts. And our charter organization, being a church, and therefore exempt from the ownership prong, is not required to be included in the reporting.

We therefore wouldn't need to get an individual from the church to give us their personal information. I could provide my information.

Is that right?

And, for this to be so, should the troop get its own EIN just to keep it separate from the church?

You may have oversight and control of the Troop's accounts but that is not the same as having significant responsibility to control, manage or direct the legal entity, which is what is required under these rules.  The Troop is not a legal entity.  Your CO is the legal entity that you operate under.  Getting an EIN number for your Troop doesn't necessarily solve the legal entity conundrum either.  EIN numbers do not confer legal status to anyone that holds them - to be a legal entity, you would likely also have to incorporate the Troop within the Commonwealth (yeah - I payed attention to where you live) as well.

So how to solve this.  I would suggest that you request a meeting with the Treasurer of your chartered organization and bring the information Hawkwin has found.  There is a better than even chance that this person may already be familiar with these rules and can get you the signature you need.  If they've made any changes to their accounts in the past couple of years, the Treasurer may have already had to deal with this.

[T113Alexandria]

Thanks! We had a meeting, which prompted me to do more checking. 

[NJCubScouter]

59 minutes ago, CalicoPenn said:

Getting an EIN number for your Troop doesn't necessarily solve the legal entity conundrum either.

Besides which I believe the BSA officially "discourages" this.  They do not want units to be legal entities.  They want the CO to be the legal entity.

[blw2]

not exactly true, based on my research a couple years ago.

The EIN has nothing really to do with being a legal entity.  they didn't want the units to incorporate, or anything like that....but getting an EIN is really not that big of a deal...maybe

What I learned is that the majority of troops and units are operating in bank accounts taht were established long ago, so a lot of folks don't know about it.... basically it was a big grey muddy mess as I was looking through it all.  The real sticky issue is the non-profit.  Basically you need to be really sure if the CO is ok with your using their status.

Anyway, what I did as I was going through all of this...

our CO is a church

I set up a new EIN for the troop.  The CO is listed as the responsible party .  I was listed as the "primary contact" can't remember the exact term...

I had a letter from the pastor allowing us to use their info, the bank wanted a copy of this.

and the bank wanted something on troop letter head outlining things like the name of the "business", the listed signers, and probably a couple other things.

So we had an EIN but were not incorporated or in any way an entity.  The church was the responsible party, but from their perspective they did not "own" the troop and wanted nothing to do with it.

 

[beaglelover]

Formed a new Pack last summer.  We had to get an EIN for our Pack, but the EIN was "applied for" by our CO (I had to get a signed form from the IH allowing me to apply on their behalf).  Therefore our CO still had ownership.  Having our own EIN also allowed us to apply for our own sales tax-exempt certificate, as packs and troops can apply on their own in our state vs. needing to do so through the CO. 

For the bank, had to provide a signed letter from the IH/CO on who was who on the committee, and who was to be on the account.  Each person had to provide personal info, Picture ID, and come down to sign a signature card.  

[blw2]

15 hours ago, blw2 said:

What I learned is that the majority of troops and units are operating in bank accounts taht were established long ago, so a lot of folks don't know about it....

I went back and re-read my post

to clarify what I meant, I think a lot of folks just don't know about this EIN requirement and this whole grey area.  Generally it would only be new units that would have to wade through it.

In our case, our stuff was a mess... and that's the only reason I got into it.

• the bank we used was a small local place and they were hard to work with
• much of our stuff (banking, paypal account, trailer registrations, etc...) was set up under the old SM's name & SSN.  SM's son was acting treasurer...SM passed away making transferring difficult & son left the picture leaving it to the CC to run for a while till I took the job.
• and prob a few other things, but you get the picture...

So, me taking the treasurer job was the perfect time to do a clean hand-off.  We set up the new bank account and such and closed out the old before I officially took it.  Through the process we realized why the previous folks had it set up that way... it was the path of least resistance.  Otherwise nothing would have ever gotten done.  The CO is somewhat easy to work with...but the authority is trumped by diocese... and really neither they or the parish want anything to do with 'ownership'

so in the end, I think a good way to look at it all is summed up well when you look at how transfer of assets would happen if the unit closes shop...it's the unit's responsibility to manage the assets while in operation.  When a unit closes down, they are responsible for paying off outstanding debts with any assets.  Then after that, any remaining assets transfer to the CO.

EIN is sorta the same.  CO is responsible party, but it's allowing the unit's representative (like a CFO) to manage things autonomously.

[John-in-KC]

Just a comment:  Each State has different banking laws. Some banks are stronger on compliance matters than others. If you need help, ask your chartered partner to help you consult with their attorney (usually a member) or ask your unit commissioner to help you get a few minutes with the general counsel to your Council (or an attorney who sits the district committee).