FinCEN ANPR seeks input on beneficial ownership reporting; future action to cover financial institution CDD requirements

Input regarding questions on implementation of the beneficial ownership information reporting provisions of the Corporate Transparency Act (CTA) – a part of the 2020 Anti-Money Laundering Act (AML Act) – is sought by Treasury’s financial crimes enforcement arm in an advance notice of proposed rulemaking (ANPR) that is out for comment until May 5.

The CTA revised the Bank Secrecy Act (BSA) to require corporations, limited liability companies, and similar entities to report certain information about their beneficial owners – that is, individual persons who ultimately own or control the companies. It also requires that FinCEN revise customer due diligence (CDD) requirements for financial institutions.

The current ANPR seeks comment on FinCEN’s implementation specifically of certain provisions in the CTA’s section 6403. This section requires reporting companies to submit to FinCEN specified information on their beneficial owners as well as specified information about the persons who form or register those reporting companies; requires FinCEN to maintain this information in a confidential, secure, and non-public database; and authorizes FinCEN to disclose the information to certain government agencies for certain purposes specified in the CTA and to financial institutions to assist in meeting their customer due diligence obligations.

The agency said that regulations implementing the beneficial ownership reporting requirements must be promulgated by Jan. 1, 2022, with an effective date to be determined. Meanwhile, it is also seeking comment at this time on its implementation of the related database maintenance use and disclosure provisions. “Section 6403’s mandate that the final rule on customer due diligence requirements for financial institutions be revised will be the subject of a separate rulemaking, about which the public will receive notice and opportunity to comment,” it said.

FinCEN notes that under the CTA, for each identified beneficial owner and applicant, reporting companies must report the person’s (i) full legal name; (ii) date of birth; (iii) current residential or business street address; and (iv) a unique identifying number from an acceptable identification document the individual’s FinCEN identifier (also in accordance with rules yet to be issued by FinCEN).

It notes that the CTA’s definition of reporting company specifically exempts 24 categories of entities, including, among others, banks and credit unions,  certain types of registered entities (e.g., various companies registered under federal securities laws and the Commodity Exchange Act, FinCEN-registered money transmitters, and registered public accounting firms); public utility companies, certain tax-exempt companies; and others. The notice also states that other categories of entities could be made exempt by Treasury secretary with the concurrence of the U.S. attorney general and the secretary of Homeland Security.

Federal Register notice: Beneficial Ownership Information Reporting Requirements

Release: FinCEN Launches Regulatory Process for New Beneficial Ownership Reporting Requirement

Be the first to comment

Leave a Reply

Your email address will not be published.