Under the ownership prong, how many individuals can be classified as beneficial owners?

The correct answer is four individuals. Under the Bank Secrecy Act (BSA) and the associated regulations, specifically the Customer Due Diligence (CDD) rule that was finalized in 2016, beneficial ownership is defined in a manner that allows for a maximum of four individuals to be identified as beneficial owners in a corporation. This includes individuals who own 25% or more of the equity interest in a legal entity, as well as one individual who has significant responsibility for managing the legal entity, such as an executive officer or senior manager.

This framework is essential for financial institutions to ensure they can identify and mitigate the risks of financial crime and money laundering associated with beneficial ownership. Understanding this aspect of the regulation helps institutions comply with their customer due diligence obligations effectively.