What is a Beneficial Owner, and Why is it Required for a Merchant Account Application?
When applying for or updating a merchant account with a credit card processing company like Vantage Card Services, you may encounter a requirement to provide information about a beneficial owner. This article explains what a beneficial owner is and why it is an essential part of your application process.
What is a Beneficial Owner?
A beneficial owner is an individual who directly or indirectly owns or controls a significant portion of a company’s equity or has substantial influence over its operations. For regulatory purposes, beneficial ownership typically applies to individuals who:
- Own 25% or more of the business's equity interest (e.g., shares or stakes).
- Exercise significant control over the company’s financial or operational decisions, even if they own less than 25%.
In addition to ownership, some applications may also require identifying an authorized representative—someone responsible for submitting the application and acting on behalf of the company.
Why is Beneficial Ownership Information Required?
The requirement to disclose beneficial owners stems from anti-money laundering (AML) regulations, such as the Bank Secrecy Act (BSA) and the Customer Due Diligence (CDD) Rule implemented by the Financial Crimes Enforcement Network (FinCEN). These rules aim to:
- Prevent Financial Crimes: Knowing who owns or controls a business helps detect and prevent fraudulent activity, such as money laundering or terrorist financing.
- Ensure Compliance with Federal Regulations: Credit card processors like Vantage Card Services are legally required to verify the identity of beneficial owners to maintain compliance with financial regulations.
- Promote Transparency: Providing beneficial ownership information ensures accountability and transparency in financial transactions.
What Information is Required for a Beneficial Owner?
When completing a merchant account application, you will need to provide the following details for each beneficial owner:
- Full Legal Name
- Date of Birth
- Residential Address
- Percentage of Ownership in the Business
- Social Security Number (SSN) or Taxpayer Identification Number (TIN)
This information is used to verify the identity of individuals involved with the business and ensure the application complies with federal regulations.
What Happens if Beneficial Ownership Information is Not Provided?
Failure to disclose beneficial ownership information can result in delays or rejection of your merchant account application. Additionally, if your account is already active and the required details are missing during an update or compliance review, funding may be placed on hold until the information is submitted.
How Does Vantage Card Services Handle Beneficial Ownership Information?
At Vantage Card Services, we take privacy and security seriously. The information you provide is used solely for regulatory compliance and account verification. We ensure it is handled securely and in accordance with data protection laws.
Why It's Important for Merchants to Understand Beneficial Ownership
Understanding the beneficial ownership requirement helps merchants prepare the necessary documents and avoid unnecessary delays during the application or update process. By providing accurate and complete information upfront, you can ensure a smooth and efficient setup for your merchant account.
Need Assistance?
If you have questions about beneficial ownership or need help with your application, our team at Vantage Card Services is here to assist. Contact us directly, and we’ll guide you through the process.