DOEP FAQs - Does the Phase I exemption available to certain subsidiaries of listed businesses apply to franchises or other affiliated entities when the listed company does not have a 51% or greater ownership stake in the affiliated entity?

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Q:  Does the Phase I exemption available to certain subsidiaries of listed businesses apply to franchises or other affiliated entities when the listed company does not have a 51% or greater ownership stake in the affiliated entity?
 
A:  No. To be eligible for exemption, any affiliated entity must meet the definition of "subsidiary" found at 31 C.F.R. § 1020.315(b)(5), which requires that the listed business own at least 51% of the common stock or analogous equity interest of the entity in question. For example, a privately-owned restaurant franchise operating under the corporate name of a listed fast food company would not be eligible for Phase I exemption. A retail business location at least 51% owned by the same listed fast food company and operating under the same corporate name as the franchise, however, would be eligible for Phase I exemption.
 
 
ADDITIONAL INFORMATION:
This FAQ was obtained from FinCEN’s issuance FIN-2012-G003 – Guidance on Determining Eligibility for Exemption from Currency Transaction Reporting Requirements, which may be found here: 
 

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