Patrick Ryan, CEO and Co-Founder of KYCnet, presented his thoughts on Legal Entity analysis at the recent ACAMS NL FATCA event. In the words of Barry Freeman,
"Patrick began by stating that at this point in time there are more questions to be asked than answers given. His message was:
- FFIs will be able to do a good job on natural person account holders as:
- They have the identity, communications and payment information to perform an effective US persons probability analysis;
- They also have a pre-existing communication mechanism in place to contact and request information, certification etc.
- FFIs will struggle more with legal entities:
- The initial categorisation into US legal persons, FFIs and NFFEs may be difficult;
- The further analysis and categorisation of NFFEs into active and passive will require information discovery of a nature uncommon or unknown within the standard AML KYC/CDD world, e.g. passive/active earnings ratios, asset utilisations; active/passive subsidiary analyses; five year histories etc.
- Passive NFFE controlling interest discovery and US person identification will be difficult;
- FFIs do not have any communication mechanisms in place regarding controlling interests which is another difficulty.
It is therefore important for FFIs to ensure they understand the difference between a controlling interesting and an ultimate beneficial owner (UBO).
- Barry J. FreemanCommunications Director
ACAMS Netherlands Chapter