The Financial Crimes Enforcement Network today issued a final rule on access to beneficial ownership information that included several significant revisions sought by the American Bankers Association from the original proposal, including language that allows banks to use the information for a range of Bank Secrecy Act and sanctions compliance purposes. FinCEN also issued two interagency statements to give banks and nonbanks guidance on the interplay between the final rule and its existing customer due diligence rule, clarifying that the access rule does not create new supervisory expectations for banks.
The final rule spells out the circumstances under which BOI reported to FinCEN may be disclosed to authorized recipients and how that information must be protected. The agency will take a phased-in approach to providing access to its BOI system, starting with a pilot program for a handful of key federal agency users in 2024 and then gradually expanding the list of authorized users. Financial institutions will gain direct access in the final phase of the rollout, although that access will be more limited than that of domestic government agency users, according to FinCEN.
FinCEN made several changes from its original proposal in response to public comments received during the rulemaking process, including to the scope of financial institution access to the BOI system, agency Director Andrea Gacki said. “The final rule adopts a broader interpretation of the phrase ‘customer due diligence requirements’ under applicable law. This change will allow financial institutions to use BOI from FinCEN for purposes that go beyond compliance with FinCEN’s customer due diligence rule, including maintaining their anti-money laundering programs, sanctions screening, and meeting suspicious activity reporting filings and enhanced due diligence requirements.”
Banks will also be able to share information with their overseas branches, except for Russia, China and countries that have been designated as state sponsors of terrorism or comprehensively sanctioned jurisdictions. “The final rule further requires that financial institutions notify FinCEN within three business days of receiving a demand from a foreign government for beneficial ownership information obtained from FinCEN, such as by subpoena,” Gacki said. “This notification requirement will alert FinCEN when foreign governments intend to obtain BOI reported to FinCEN outside of the procedures established in the Corporate Transparency Act.”
The access rule is the second of three planned rulemakings by FinCEN to implement the Corporate Transparency Act. The first concerning reporting of BOI to the agency goes into effect Jan. 1. The third will revise FinCEN’s customer due diligence rule and has yet to be released for review.
ABA: FinCEN made welcome revisions to access rule
FinCEN’s revisions to the final rule from the original proposal will allow banks to access the registry as envisioned by Congress in the Corporate Transparency Act, ABA President and CEO Rob Nichols said.
“Although many important details remain to be determined as FinCEN continues its implementation work, the final rule for accessing the database includes a number of ABA-recommended changes,” Nichols noted. “These improvements will help enable the registry to deliver on its promise of providing law enforcement and financial institutions with highly useful information, the true owners of businesses. This information will make it harder for criminals, terrorists and other bad actors to access the U.S financial system and do harm to our country.
“We appreciate FinCEN’s willingness to work constructively with the industry to improve the final rule, and we will continue to do our part to make this effort a success and make life tougher for illicit actors,” he said.
