A beneficial owner is an individual, if any, who holds 25% or more equity ownership of your business and at least 1 individual who has controlling influence.

To help the government fight financial crime, Federal regulation requires covered financial institutions to obtain, verify, and record information about the beneficial owners of legal entity customers. Legal entities can be abused to disguise involvement in terrorist financing, money laundering, tax evasion, corruption, fraud, and other financial crimes.

Requiring the disclosure of key individuals who own or control a legal entity (i.e., the beneficial owners) helps law enforcement investigate and prosecute these crimes.

What is a Legal Entity?

A legal entity is a corporation, limited liability company, partnership, and any other similar business entity formed in the United States or a foreign country.

Who needs to provide this information?

We'll request this information from the person who opens a new PayPal account on behalf of a legal entity or the primary account user for an existing account. Users must provide the ultimate beneficial owner who must be a natural person.

What information do I have to provide?

You'll be asked to provide the name, address, date of birth, and Social Security Number (or passport number or other similar information in case of foreign persons) for at least 1, and a maximum of 5 beneficial owners (each of whom must be a natural person, not a legal entity) who satisfy the following criteria:

• Each individual, if any, who directly or indirectly owns 25% or more of the equity interests of your legal entity company and,
• An individual with significant responsibility for managing your legal entity company (e.g., Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner President, Vice President, or Treasurer).

You must provide information for individuals who satisfy the above ownership criteria, either directly or indirectly, through multiple legal entities.

What will happen if I don't provide the required information?

All US legal entities will need to provide Beneficial Owner information and have that information verified within 60 days of onboarding. Failure to do so will result in your account being limited.

What information should I provide when my business is owned by another company?

Under the Rule's beneficial ownership identification requirement, PayPal must collect from its legal entity customers information about individual(s) who are the beneficial owner(s). Legal entity customers are required, by regulations that apply to the financial institution(s) PayPal partners with to process your card payments, to provide the identities of individuals who satisfy the definition, either directly or indirectly through multiple corporate structures, as illustrated below.

For example: Allan is a beneficial owner of Customer because he owns indirectly 30% of its equity interests through his direct ownership of Company A. Betty is also a beneficial owner of Customer because she owns indirectly 20% of its equity interests through her direct ownership of Company A plus 16 2/3% through Company B for a total of indirect ownership interest of 36 2/3%. Neither Carl nor Diane is a beneficial owner because each owns indirectly only 16 2/3% of Customer's equity interests through their direct ownership of Company B.

Where can I learn more about this?

To find more information, view The Customer Due Diligence (CDD) Requirements for Financial Institutions.