Financial institutions and others have until Feb. 14 to submit their comments to Treasury’s financial crimes enforcement unit on a proposed rule that would govern “beneficial ownership information” (BOI) that they and others will need to comply with certain federal Bank Secrecy Act/anti-money laundering (BSA/AML) requirements.
This is about information that, among other things, financial institutions need to satisfy their obligations under the Financial Crimes Enforcement Network’s (FinCEN) customer due diligence (CDD) regulations, which require covered financial institutions to identify and verify beneficial owners of legal entity customers.
The rule, proposed under the Corporate Transparency Act (CTA), is contained within the Anti-Money Laundering (AML) Act. Its aim is to implement “the strict protocols on security and confidentiality required by the CTA to protect sensitive personally identifiable information (PII) reported to FinCEN.” It would, FinCEN noted, explain the circumstances in which specified recipients – including financial institutions and their prudential regulators – would have access to BOI and outlines data protection protocols and oversight mechanisms applicable to each recipient category.
In its proposed rule notice, FinCEN pointed out also that the CTA requires it to revise the current CDD rule within one year of Jan. 1, 2024 – the effective date of the final BOI reporting rule – by rescinding current regulatory provisions regarding how financial institutions are to identify and verify a company’s BOI; definitions of “beneficial owner” and “legal entity customer”; rule exceptions; records retention; and more.
The agency said it plans to implement this revision through a future rulemaking process. “FinCEN anticipates that this rulemaking to revise the CDD Rule will touch on the issue of the interplay between financial institutions’ CDD efforts and the beneficial ownership IT system that FinCEN is developing to receive, store, and maintain BOI,” it stated.