An exchange reconciles three records: what the state’s filing says, what your operating agreement says, and what you typed into the application. Eligibility is rarely the problem. In my experience applications stall on the beneficial ownership question, because people answer it from memory and their own operating agreement then contradicts them. Assemble all three before you open the form.
Part of our guide: Family Office.
The short version
- The reviewer runs a consistency check across three independent records, and any disagreement reads as a question about who controls the company.
- Beneficial ownership has two prongs: anyone holding 25 percent or more of the equity, plus one individual with significant responsibility to control, manage, or direct (31 CFR § 1010.230(d)).
- The institution may take your word on beneficial ownership only while nothing contradicts it, and your own documents are the usual contradiction.
- The FinCEN report and the exchange’s question are separate obligations. One of them changed in 2025. The other did not.
- Pull the state’s record first. It is the only one you did not write, and the only one checked without asking you.
What the reviewer is reconciling
The state’s filing is the anchor, because the rule defines the customer by reference to it: a legal entity customer is one “created by the filing of a public document with a Secretary of State or similar office” (§ 1010.230(e)(1)). It carries the legal name, formation date, registered agent, and standing. The operating agreement carries the ownership schedule and the authority to bind. The application carries whatever you typed, and two of the three you wrote.
The hinge is one clause about how far the institution may trust you:
“A covered financial institution may rely on the information supplied by the legal entity customer regarding the identity of its beneficial owner or owners, provided that it has no knowledge of facts that would reasonably call into question the reliability of such information.”
That is the operating condition of the review. Your certification stands at face value until something in front of the reviewer disagrees with it. A stale registered agent address, an officer title appearing in no document you filed, a member removed by amendment who is still on the form: each calls the rest of the package into question. Resolving one is a written act: the file must record any document relied on, any non-documentary method used, and “the resolution of each substantive discrepancy” (§ 1010.230(i)(1)(ii)). To you a mismatch is a typo. To them it is a memo somebody has to write, sign, and keep for five years.
Which rulebook the venue is working from
Section 1010.230 binds “covered financial institutions,” which § 1010.605(e)(1) limits to banks, brokers or dealers in securities, mutual funds, and futures commission merchants or introducing brokers in commodities. A venue registered as a money services business is absent from that list. Its obligation runs through § 1022.210(a), which requires a program “reasonably designed to prevent the money services business from being used to facilitate money laundering and the financing of terrorist activities.”
So the 25 percent figure comes from a rule that may not bind your venue. Treat it as the lowest common denominator: some venues ask below it, some ask for every member. Check the other direction too: FinCEN requires an MSB to register on Form 107 within 180 days and renew every two years, so status is worth confirming before you choose where the entity holds assets.
Answering beneficial ownership from the cap table
The ownership prong reaches each individual who “directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25 percent or more of the equity interests.” The control prong reaches one individual with significant responsibility to control, manage, or direct, with examples including Chief Executive Officer, Managing Member, and General Partner. The arithmetic explains the form: at most four people can each hold 25 percent or more, so there are four ownership slots and one control slot, and the same person often fills both.
Two wrinkles catch this audience. Indirect ownership looks through entity members, so a holding company in the chain means percentages multiply. And where a trust holds 25 percent or more, the rule names the trustee as the beneficial owner, which surprises families who put an irrevocable trust above the LLC and assumed the layering stopped there. The trusts hub covers what else changes.
Then the conflation. People treat the exchange’s question and the FinCEN report as one obligation. FinCEN’s March 2025 interim final rule redefined “reporting company” to reach only foreign-formed entities registered in a US state or tribal jurisdiction:
“FinCEN also exempts entities previously known as ‘domestic reporting companies’ from BOI reporting requirements.”
That removed a filing for US-formed companies and left § 1010.230 untouched. I have watched people conclude the account-opening question went with it. The form still asks. Answer it from the cap table.
Why the assembly order matters
Pull the state’s filed record from the Secretary of State first and repair what is stale, because every other document is written to match it and you cannot revise it to fit an answer you already gave. The EIN letter, the executed agreement with all amendments, the cap table, and identification for each individual follow from it. The application goes last, transcribed from that stack. Fill the form first and every later document becomes something you reconcile backward to a sentence typed from memory, which is how people end up amending an agreement to fit an application. Built once in that order, it also becomes a standing data room.
What I actually see
The ownership answer comes from feel. Somebody is the sole owner in their own head while the agreement shows a trust holding the majority, or a second member added four years ago and never removed. The moment that agreement reaches the file, reliance on the certification is gone and the reviewer is documenting a discrepancy instead of opening an account.
The second is a title that exists in no document. The application offers a dropdown with President and Chief Executive Officer on it, so somebody picks one, while the agreement names a Manager and creates no officers. Managing Member satisfies the control prong on its own. A title with nothing behind it invites the exact question the form was written to answer.
The third is the state record nobody looked at: the agent resigned, the address is old, the annual report lapsed and standing shows something other than active. It is the record the applicant neither wrote nor checked, and the first the reviewer pulls.
The check worth running is a three-column read. Six rows: legal name, state and date of formation, principal address, registered agent, who may bind the company, and who holds what percentage. Three columns: the state’s record, the operating agreement, the application. Any row that fails to read the same across all three gets fixed before you start. It takes an hour, and it finds the discrepancies a stranger would otherwise have to resolve.
Where this goes wrong
Applications fail on disagreement between records far more often than on eligibility.
An operating agreement amended after submission, leaving two conflicting versions in the file. A member admitted by handshake and never written into the ownership schedule, or percentages recalled from formation day after a later contribution moved them, so the form rests on no document. An EIN obtained under a name that differs from the state’s filing, found by the reviewer instead of disclosed by the applicant. And the costliest: an agreement that names managers but never says who may open accounts, leaving the reviewer nothing to point at when recording authority.
The decision rule
- Pull the state’s filed record yourself before opening any application, and read it against your own copy.
- Repair anything stale at the state level first, registered agent and annual report included.
- Write the cap table on paper, look through any member that is an entity, and name the trustee where a trust holds 25 percent or more.
- Name one control person who appears in the operating agreement, using the title the document actually creates.
- Send the executed agreement with every amendment as one ordered file.
- Reconcile the six identity fields across all three records before submitting, because the reviewer will do it either way.
- Answer beneficial ownership from documents, since a slow accurate answer costs less than a fast one you have to correct.
- Keep the package you submitted, so you know what you certified when ownership next changes.
Where this sits
KYB is the gate in front of every entity-held account, downstream of the entity decision and upstream of custody. Whether to hold crypto in a Wyoming LLC is settled before this review starts, and the Wyoming LLC hub covers that ground. Whether the entity holds the wallet and how the account gets titled are custody questions.
These questions break at professional boundaries. The attorney drafts the operating agreement, the CPA obtains the EIN and files the returns, and the onboarding team reads both while speaking to neither. Each is competent in its own lane, and none owns the question of whether the three records still describe the same company. Somebody on your side has to, and in practice that is you.
Sources
- 31 CFR § 1010.230, Beneficial ownership for legal entity customers
- 31 CFR § 1010.605(e)(1), Covered financial institution
- 31 CFR § 1022.210, AML programs for money services businesses
- FinCEN, Money Services Business (MSB) Registration
- FinCEN, BOI reporting removed for US companies, 21 March 2025
- FinCEN, Bank Secrecy Act filing information
- Wyoming Secretary of State, Business Division
Related
- Crypto custody for LLCs
- Can a Wyoming LLC own a crypto wallet?
- Should I put my crypto in a Wyoming LLC?
- Can an LLC hold stablecoins?
- Crypto estate data room checklist
- Crypto banking and exchange
Last updated: 3 August 2026.
This article is general education, not legal, tax, or investment advice. Onboarding requirements vary by institution and change without notice, and a document set that satisfies one venue may not satisfy another. Talk to a qualified attorney and CPA about your own situation.
