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Introduction

An entity in Lead represents a legal person or organization with specific rights and roles related to our products. Entities are created for each of your end users and are required to use credit, depository, and card products, or to generate account numbers in Lead’s systems.

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Entity Types

  • Individual Entity: For individual persons.
  • Business Entity: For businesses (excluding sole proprietorships). Requires details on beneficial owners and control persons.
  • Sole Proprietorship Entity: For sole proprietorships. Exempt from beneficial ownership requirements.
Entity data requirements vary by the entity’s role in relation to Lead products. For example, consider Pete’s Pizza. Pete’s Pizza is an LLC business owned by Pete, a control person, and his wife Amanda, a beneficial owner. Pete’s sister, Sam, is an authorized signer on the business checking account and Daisy, Pete’s employee, is an authorized debit card user with restricted access on the business account.
  • Pete, the control person, is created as an individual entity with full KYC details (e.g., name, date of birth, contact information, physical address, and government verified identification).
  • Amanda, the beneficial owner, is created as an individual entity with full KYC details.
  • Pete’s Pizza is created as a business entity with full KYB details, your risk assessment on the business, and Pete and Amanda listed as the control person and beneficial owner, respectively.
  • Sam, Pete’s sister and authorized signer, is created as an individual entity with full KYC details and later associated with the business checking account.
  • Daisy, Pete’s employee and an authorized user, is created as an individual entity with partial KYC details (e.g., name and contact information).

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Types of Entity

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Individual

For end customers who are individuals:
  • Create individual entities for the roles of authorized_user, authorized_signer, and/or account_holder.
  • Typically, the individual is the account holder.
  • Use authorized_user or authorized_signer roles when the person is not the legal account holder but requires limited access.

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Business

For businesses (excluding sole proprietorships):
  • Create individual profiles for beneficial owners and control persons.
  • The data requirements for beneficial owners and control persons match the “authorized signer” data requirements.
  • Create the business entity profile, linking the individual profiles of its beneficial owners and control persons.

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Beneficial Ownerhip

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Requirements

Lead requires you to send Beneficial Ownership information that is in line with the CIP program reviewed during Due Diligence. At a minimum, this should include all Beneficial Owners (UBOs) who are natural persons with direct or indirect ownership percentages of 25% or greater.
  • Control Person: You must also identify one natural person with significant responsibility to control, manage, or direct the business (e.g., CEO, COO, President). This person is required regardless of their ownership percentage.
  • Thresholds: If your KYB process expressly states a lower percent than 25%, then all beneficial owners who meet your expressly stated percentage must be provided.
The “Drill-Down” Rule for Entities A beneficial owner must be a natural person (an individual). If a business entity (like a parent company or holding company) owns 25% or more of the customer, you cannot list that entity as the owner. Instead, you must “drill down” by applying the same ownership requirement to that entity. You must look at its owners, and continue this process up the ownership chain until you have identified all natural persons who have a 25% or more indirect ownership stake in the original customer.

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Examples

  • Customer: Bob’s Pizza Company
  • Owners:
    • Alan (Individual): Owns 60%
    • Bob (Individual): Owns 40% (and is also the CEO)
  • Other Individual: Charlie (an authorized signer on the account)
  • Action:
    1. Create individual profiles for Alan, Bob, and Charlie, providing their “authorized signer” data.
    2. Create the business profile for Bob’s Pizza Company.
    3. Link Alan as a beneficial owner (owns >25%).
    4. Link Bob as a beneficial owner (owns >25%) AND as the control person (is the CEO).
    5. Charlie does not need to be linked to the business as an owner or control person.
  • Customer: “SaaS Co”
  • Immediate Owners:
    • “Parent Corp” (an entity): Owns 80%
    • Jane Smith (Individual): Owns 20%
  • Action: We must “drill down” into “Parent Corp” because it’s an entity owning >25%.
  • “Parent Corp” Owners:
    • “Holding LLC” (an entity): Owns 50%
    • Mark Lee (Individual): Owns 50%
  • Action: We must “drill down” again into “Holding LLC.”
  • “Holding LLC” Owners:
    • Susan Kay (Individual): Owns 100%
  • Final UBO Calculation for “SaaS Co”:
    • Jane Smith: 20% (Direct) $\to$ Not a 25% UBO.
    • Mark Lee: 50% of 80% = 40% (Indirect) $\to$ IS a 25% UBO.
    • Susan Kay: 100% of 50% of 80% = 40% (Indirect) $\to$ IS a 25% UBO.
  • Conclusion:
    • You must provide profiles for Mark Lee and Susan Kay as beneficial owners (using “authorized signer” data requirements).
    • You do not report “Parent Corp” or “Holding LLC” as owners.
    • You must also identify and provide the profile for the control person of “SaaS Co” (e.g., their CEO), who may or may not be one of these individuals.