US Treasury Department Introduces Beneficial Ownership Reporting Form to Enhance AML Measures

Richard M.

October 13, 2023

3 minutes read

The US Treasury Department designed a beneficial ownership report form to strengthen the security of financial institutes whilst removing escape hatch for financial criminals.

The US Treasury Department is all set to reveal its most awaited database of the company owners’ information to comply with the federal Corporate Transparency Act, and they are eliminating the loophole for the financial criminals to check “unable to obtain” in the beneficial ownership reporting form. The Financial Action Task Force (FATF) tasked to implement the Corporate Transparency Act faced wide criticism after the form to gather information about the ownership of the company’s real owner. This form was essential to comply with the AML solutions because it has to supply the database with primary information about business owners.

In the revised version, the department removed the check “unknown,” in which the entities can state owners’ names, addresses, locations, and other identity information is unidentified. After removing this checkpoint, companies must provide essential data about the real owners or details about shareholding and asset financial institutes to uphold strict regulations to combat money laundering. The Transparency Act was issued after one report published in 2020 by a US news agency that claimed $2 trillion in suspicious transactions revolving in the global financial ecosystem and its main source leading toward the US financial system. After that, US lawmakers issued the Corporate Transparency Act in 2021 to reveal the hidden business owners and prevent the illicit flow of dirty money. A primary component of this bill to report about the beneficial owner is still not completed.

Financial Crimes Enforcement Network (FinCEN) is going to update the database with owner information of corporations, limited liability firms, and other organisations using the legally required disclosure form, which will assist in boosting financial authorities’ surveillance and eliminate forged anonymous entities. The implementation of this new law will start on Jan 1st, 2024. So, the registered companies have time till the end of next year, and the companies or organisations which get licensed after this year will get 90 days to report beneficial ownership information. Policy director at the Financial Accountability and Corporate Transparency (FACT), Zorka Milin, stated. “We are pleased to see the changes, and we applaud FinCEN for considering the concerns that we and others have raised. The previous proposal would have rendered the reporting effectively optional, which has no precedent and no legal basis in the statute’s text; also, we see no policy justification for that.”

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