FinCEN Releases Final Rule to Implement Beneficial Ownership Reporting Requirements

US Treasury Department’s FinCEN has issued a highly anticipated final rule for the implementation of beneficial ownership requirements of the Corporate Transparency Act.

On September 30, the Financial Crimes Enforcement Network (“FinCEN”), within the U.S. Department of the Treasury, issued a highly anticipated final rule, Beneficial Ownership Information Reporting Requirements (the “Final Rule”), implementing the beneficial ownership reporting requirements of the Corporate Transparency Act (“CTA”).

The Final Rule requires certain entities organized or registered to conduct business in the United States to disclose identifying and beneficial ownership information (“BOI”) to the U.S. federal government. 

The Rule addresses a major perceived deficiency in the U.S. anti-money laundering regime and will greatly expand the scope of information that certain legal entities are required to disclose under U.S. law. 

The Final Rule will take effect on January 1, 2024, with a one-year grace period for covered entities created or registered prior to the effective date.

The CTA, enacted as part of the landmark Anti-Money Laundering Act of 2020, is intended to expand and modernize the U.S. government’s ability to collect beneficial ownership information to deter money laundering, corruption, tax evasion, fraud, and other financial crime. 

The CTA requires FinCEN to implement rules for reporting BOI of legal entities organized or registered to conduct business in the United States. FinCEN is also responsible for developing protocols for access to, and the sharing of beneficial ownership information.

The CTA also requires FinCEN to amend the Customer Due Diligence (“CDD”) Rule that applies to financial institutions to account for the new requirements of the CTA. The Final Rule addresses only the reporting of BOI, with the remaining requirements to be addressed through future rulemaking.

The Final Rule requires reporting companies to file reports that identify themselves and provide the information of their beneficial owners and company applicants.

This information will be reported to, and housed within, the Beneficial Ownership Secure System (BOSS), a non-public database under development by FinCEN.

It is anticipated that information in BOSS will be available to federal agencies in support of national security, intelligence, and law enforcement activity, as well as state, local, and foreign law enforcement agencies in specified circumstances.

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