In a letter today, the American Bankers Association and 51 state bankers associations urged the Financial Crimes Enforcement Network to withdraw its proposal regarding access to the registry of beneficial ownership information, calling the proposal “fatally flawed.” FinCEN established the registry last fall pursuant to the Corporate Transparency Act part of the Anti-Money Laundering Act of 2020, which requires the agency to create a registry of the beneficial owners of legal entities formed or registered in the U.S. while minimizing the compliance burden on the regulated community.
The associations said that FinCEN’s proposal allows banks to access beneficial ownership information in the registry only for purposes of complying with the 2016 customer due diligence rule, and not for broader CDD purposes. If banks use the beneficial ownership information in the registry, banks will need to spend resources walling off that information from information obtained directly from customers, to prevent the registry’s information from being used for the broader purposes of risk mitigation and Bank Secrecy Act compliance. The associations also criticized the proposal for prohibiting banks from sharing beneficial ownership information outside U.S., which would prevent banks from sharing that information with bank personnel located in foreign jurisdictions.
It is “clear that the proposal does not meet Congress’ goal of promoting financial transparency while eliminating duplicative reporting requirements and reducing unnecessary regulatory costs and burdens,” the associations said. “The proposal creates a framework in which banks’ access to the registry will be so limited that it will effectively be useless, resulting in a dual reporting regime for both banks and small businesses.”
