Contractor Management, at its core, manages contractors. Specifically, this means handling payments when sending contractors money for their work. Because we are moving money around (especially across borders or between different currencies), this qualifies as money transmission—a service that can be used for legal or illegal purposes.

Why is this regulated?

Because money is transferred, there’s a chance it could be used for illegal activities, like money laundering. To prevent this, the government requires businesses that handle money to follow special rules, even if their main job is not providing financial services.

So why does this apply to contractor management?

This applies to Contractor Management because this service:

1. Sends payments to contractors on behalf of other companies,

2. Moves money between countries (which often happens with international contractors),

3. Exchanges currencies when paying contractors,

This qualifies as a Money Services Business (MSB) when we are managing contractor relationships.

Because Contractor Management's main role is managing contractors, the money-moving aspect of this—sending payments to contractors, especially across borders—means we are handling something that the government closely watches to prevent financial crimes. That’s why contractor management services sometimes fall under Money Services Business regulations. This is also why we are required to establish compliance with Anti-Money Laundering (AML) and Know-Your Customer (KYC) compliance.

Why Do We Need an Authorized Representative to Sign Up?

When signing up for Contractor Management services, we require an authorized representative from your company to complete the registration process. This representative must be someone with the authority to legally act on behalf of your business. Here’s why:

1. Legal Accountability:

   • Since we handle financial transactions, we must ensure that the person signing up has the legal authority to bind your company to our services. This helps prevent unauthorized individuals from setting up services under your company’s name.

2. Compliance with Regulations:

   • Government regulations require us to know exactly who is authorizing the use of our services. This ensures that the person responsible for the contractor payments has been properly verified and holds the necessary authority within your organization.

3. Fraud Prevention:

   • Requiring an authorized representative also helps reduce the risk of fraud, ensuring that only legitimate, authorized individuals are involved in managing sensitive contractor information and payments.

Why Do We Need Beneficial Owner Information?

In addition to verifying an authorized representative, we are required to collect beneficial owner information. A beneficial owner is a person who ultimately owns or controls the business, even if they are not directly involved in day-to-day operations. Here’s why this is important:

1. Transparency:

   • Government regulations mandate that we know who ultimately owns or controls the businesses that use our services. This transparency helps prevent the hiding of illegal activities, such as money laundering, behind complex business structures.

2. Compliance with Anti-Money Laundering (AML) Laws:

   • Knowing the beneficial owners of your company allows us to comply with anti-money laundering (AML) regulations. These laws are designed to prevent criminals from using businesses like yours as a way to "clean" money obtained from illegal activities.

3. Risk Management:

   • By understanding who is financially benefiting from the business, we can better assess potential risks and ensure that we are only working with legitimate companies. This helps protect both our services and your business from being misused for illegal purposes.

How Does This Protect Your Business?

These requirements, having an authorized representative and collecting beneficial owner information, are designed to protect your business from potential legal and financial risks. Here’s how they benefit you:

• Legal Protection: Ensuring the right people are involved in the signup process helps prevent unauthorized actions and fraud.

• Compliance: Meeting these regulatory standards helps you avoid legal penalties, fines, and other consequences of non-compliance.

• Risk Mitigation: By vetting the ownership and authority of businesses using our services, we reduce the chances of fraudulent activities affecting your contractor payments or reputation.

Trust, Security, and Compliance Standards

As a money transmitter license holder, Wingspan is legally mandated to collect specific identification information, including Social Security Numbers (SSNs), from authorized representatives of client companies. This requirement stems from regulations such as the Bank Secrecy Act, FinCEN’s Customer Due Diligence Rule, and the USA PATRIOT Act. These laws are in place to prevent financial crimes and apply to companies that facilitate financial transactions, even if they are not traditional banks.

While this may seem like an unusual request, it’s standard for Money Transmitters and financial service providers to require this level of information from company representatives including companies like JP Morgan Chase, American Express, Stripe, Brex and others. It’s also the norm with leading Contractor Management and Payments providers.

What Information is Required for Authorized Representatives and Beneficial Owners?

To comply with regulatory requirements, we must gather specific information from the authorized representative, as well as any beneficial owners if applicable. Here’s what’s typically required:

Authorized Representative Information: Legal first and last name, job title, phone number, email address, ownership stake (if applicable), date of birth, tax ID (SSN or ITIN for U.S. citizens, passport number for non-U.S. citizens), and personal address.

Beneficial Owner: Any individual with a 25% or greater ownership interest in the business. This information enables us to comply with the Bank Secrecy Act (BSA) and FinCEN’s Customer Due Diligence requirements, ensuring transparency and security.

If your business is publicly traded or structured as a C-Corporation with dispersed ownership (where no single person owns 25% or more), you may not need to provide beneficial ownership information. Instead, an authorized representative with signing authority is required.

Business Information for Compliance

During the account setup process, we also collect information about your business, including the legal business name, federal tax classification, Employer Identification Number (EIN), business industry, email, phone number, number of employees, business address, and incorporation state or territory. We may also request documents such as Proof of Incorporation (e.g., Articles of Incorporation) and identity verification documents (e.g., passport, driver’s license) to further secure the account setup process.

Security Practices

At Wingspan, we use advanced security measures to protect your sensitive information. Our systems incorporate:

• Bank-Level Encryption: Ensuring all data is encrypted for secure transmission and storage.

• Penetration Testing and Continuous Monitoring: Regular testing to identify and mitigate potential vulnerabilities.

• Data Isolation and Compliance: Our data policies include SOC 2, PCI, and HIPAA compliance, alongside secure data isolation and continuous backups.

These measures are in place to maintain trust, ensure compliance, and safeguard the data you provide to us, ensuring that your contractor management services are secure and fully compliant with all regulatory standards. Read more about Trust and Security.

We understand that these regulatory requirements may seem complex, but they are in place to safeguard your business and contractors. By ensuring that the right people are involved in the signup process and that beneficial ownership is clear, we protect you from legal risks and ensure your contractor payments are secure and compliant with all relevant laws.

If you have any questions about these requirements, please contact us.