What must a credit union do if it cannot verify a legal entity's beneficial owner's identity?

When a credit union cannot verify a legal entity's beneficial owner's identity, filing a Suspicious Activity Report (SAR) is a necessary step in compliance with BSA regulations. This action is critical because the inability to verify the identity raises potential red flags concerning the legitimacy of the entity's activities or the intent behind maintaining the account.

Filing a SAR allows the credit union to document the suspicious circumstances and provide relevant information to law enforcement or regulatory authorities. This report is essential for detecting and preventing money laundering and other financial crimes. The act of filing a SAR ensures that the credit union is fulfilling its obligation to monitor and report suspicious activities, thereby helping to maintain the integrity of the financial system.

While other actions such as closing the account or informing the legal entity might seem like possibilities, they do not adequately address the responsibility of the credit union under the BSA to report suspicious activities. Continuing to keep the account open without taking proper measures could expose the institution to regulatory scrutiny and liabilities. Thus, filing a SAR is the most appropriate response in such circumstances, aligning with compliance best practices.