The Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury has begun a rulemaking to implement the beneficial ownership reporting provisions of the new Corporate Transparency Act (CTA), which was included within the Anti-Money Laundering Act of 2020 as part of the National Defense Authorization Act and became law on January 1, 2021.
The CTA requires reporting companies (corporations, limited liability companies, and similar entities, subject to certain statutory exemptions) to submit to FinCEN specified information on their beneficial owners—the individual natural persons who ultimately own or control them—as well as specified information about the persons who form or register those reporting companies. The CTA authorizes FinCEN, among other things: (i) to maintain the reported beneficial ownership information in a confidential, secure, and non-public database for not fewer than five years after the date on which the reporting company terminates, (ii) to disclose beneficial ownership information subject to appropriate protocols and for specific purposes to several categories of recipients, such as federal law enforcement, and (iii) to revise existing financial institution customer due diligence regulations concerning beneficial ownership to take into account the new reporting requirements of beneficial ownership information.
Under the CTA, FinCEN recently issued an Advance Notice of Proposed Rulemaking to invite comments on all aspects of CTA, especially on 48 questions that mainly focus on:
(i) certain definitions of CTA,
(ii) reporting of beneficial ownership information,
(iii) FinCEN identifier of beneficial owner,
(iv) security and use of beneficial ownership and applicant information, and
(v) the cost and time burden placed on businesses and governmental agencies by the regulations.
The comment period closes May 5, 2021. FinCEN must promulgate regulations prescribing procedures and standards governing beneficial ownership reporting and the FinCEN identifier by January 1, 2022.