The Financial Crimes Enforcement Network today proposed regulations to implement the Corporate Transparency Act—a bipartisan, American Bankers Association-supported bill that was included in the broader package of Bank Secrecy Act/anti-money laundering reforms in the AML Act of 2020. The proposal would require corporations, limited liability companies and similar entities to report certain information about their beneficial owners, as FinCEN looks to ultimately create a beneficial ownership registry.
Collecting this information is intended to help prevent and combat money laundering, terrorist financing, tax fraud and other illicit activity, FinCEN said in its notice of proposed rulemaking. FinCEN defines a beneficial owner as an individual that exercises “substantial control over the reporting company,” or owns or controls at least 25% interest in the reporting company.
The proposed rule would require a reporting company to provide the name, birthdate, address and a unique identifying number from an acceptable identification document (along with an image of the document) for each beneficial owner and company applicant. Individuals would also have the option to provide beneficial ownership information to FinCEN and obtain a “FinCEN identifier,” which can then be provided in lieu of other required information.
Comments on the proposal will be due on Feb. 7. FinCEN is planning additional rulemakings to implement the CTA, including establishing rules for who may access beneficial ownership information through the database and what safeguards will be put in place to secure and protect the data, and revising the customer due diligence rule to reflect the new beneficial ownership reporting requirements. FinCEN is also in the process of developing the database infrastructure that will house the beneficial ownership information.
