In this piece, NMA will walk through various components of the underwriting process. Here, we’ll dissect common, industry-wide underwriting requests required to board 5968 business, the purpose of these requirements, and solutions that can be used to address each requirement in order to expedite the underwriting process.
Understanding underwriting components will grant merchants and partners greater insight into the necessity for fraud mitigation, and will empower businesses to remain in compliance while simultaneously building a better payments industry. Following are key reference components to keep top-of-mind.
Underwriting is unable to validate beneficial ownership of the account.
- Why am I receiving this message?
- Validating a merchant’s business and ownership structure is an essential component of underwriting and required as part of FinCEN‘s Anti-Money Laundering efforts. In addition to confirming an organization is in good standing, all beneficial owners with 25% or more ownership must also be confirmed.
- What should I do?
- Typically, resolving this type of issue and responding to a message like the one above is fairly simple. Simply provide one or more of the documents below, and you’ll likely be in the clear. Additional information may be required if your situation is more complex, but providing these documents will meet basic requirements:
- Business license with the Owner(s) listed
- SS-4 or EIN Letter listing Owner (for Sole Proprietors)
- Shareholder’s minutes that show the Owner(s) (Corp, LLC, LLP)
- Schedule K-1 that list the Owner(s) (Corp, LLC , LLP)
- Business Operating Agreement with Ownership breakdown and stock percentages
- Typically, resolving this type of issue and responding to a message like the one above is fairly simple. Simply provide one or more of the documents below, and you’ll likely be in the clear. Additional information may be required if your situation is more complex, but providing these documents will meet basic requirements:
Due to the processing volume the merchant is requesting or the high level of financial exposure, Underwriting needs to review the merchant’s financial history.
- Why am I receiving this message?
- For merchants processing a significant amount of volume or presenting significant financial exposure, reviewing the financial health of the merchantA business that accepts credit cards for goods or services. and their company is a necessary part of underwriting. This helps to ensure merchants do not get in over their heads and helps to mitigate fraud.
- What should I do?
- For the most part, providing documents demonstrating your organization’s financial health will be most beneficial in these types of situations. In this scenario, you should provide both documents below:
- Business Tax Returns Income Statements
- Balance Sheet for the most recent two years for Corp, LLC, LP, or Personal Tax Returns for the most recent two years for Sole Proprietorship.
- Business bank statements showing sufficient cash flow
- For the most part, providing documents demonstrating your organization’s financial health will be most beneficial in these types of situations. In this scenario, you should provide both documents below:
Underwriting is unable to confirm the identity of the principal(s).
- Why am I receiving this message?
- As part of NMA’s KYC (Know Your Customer) due diligence and in compliance with our BSA/AML Customer Identification Program, we need to validate the identity of all principal owners.
- What should I do?
- Confirming the identity of all principal owners is simple – just provide the following:
- Valid, unexpired driver’s license
- Valid/notarized passport
- Government-issued Identification (with photo)
- Confirming the identity of all principal owners is simple – just provide the following:
Need more information about underwriting and the payments industry? Contact the experts at National Merchants Association, info@nationalmerchants.com or education@nationalmerchants.com