Lawmakers criticize FinCEN’s beneficial ownership registry reporting proposal

In a letter today, a bipartisan group of 12 lawmakers called on the Financial Crimes Enforcement Network to amend beneficial ownership information reporting requirements set to take effect next year, saying the agency’s rulemaking deviates from congressional intent by allowing beneficial owners to withhold identifying information. Signatories included House Financial Services Committee Chairman Patrick McHenry (R-N.C.) and Senate Banking Committee Chairman Sherrod Brown (D-Ohio).

FinCEN established a BOI registry last year pursuant to the Corporate Transparency Act. The new regulations would mandate that many corporations, limited liability companies and other entities created in or registered to do business in the U.S. to report information about their beneficial owners to the agency. Lawmakers said they were disappointed that FinCEN instead created an “escape hatch” to the reporting requirements by allowing “unable to identify…unable to obtain” or “unknown…not able to obtain” determinations in the registry. The CTA clearly states that the registry must include the name, date of birth, address and other identifying information about beneficial owners, they said.

“Allowing these options in any final rule will degrade the benefits of the registry to law enforcement and to financial institutions and provide an opportunity for bad actors to obscure the identity of the company applicant or beneficial owner,” the lawmakers said. “The result is that the registration form itself will undermine the underlying, bipartisan goals of the CTA.”

The American Bankers Association raised the same concerns in a March letter to FinCEN. The association urged the agency not to allow “unknown” or “unable to identify” as responses to key demographic information. It also asked FinCEN to revise its estimate of burden to regulated entities in its Paperwork Reduction Act request to include the effect of the agency’s reporting requirement on financial institutions, which likely will be asked by customers about the purpose of the reporting requirement and will seek assistance fulfilling that requirement.