FinCEN Launches Regulatory Process on Beneficial Ownership Reporting

On April 5, 2021, the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (FinCEN) published in the Federal Register a proposed rule seeking public commentary on implementing regulation requiring domestic and foreign legal entities to report information about their beneficial ownership.

The proposal stems from the Corporate Transparency Act and the amendments to the Bank Secrecy Act requiring corporations, limited liability companies, and similar entities to report certain information about their beneficial owners. The new requirement will enhance the security of the U.S. banking system by allowing it to identify any malicious actors who engage in money laundering, finance terrorism, and tax fraud activities.

The reported beneficial information would be kept in a confidential and non-public database and only accessible to the federal law enforcement agencies and financial institutions using appropriate protocols. 

FinCEN is seeking commentary on the standards and procedures for requiring reporting companies to submit information to FinCEN, and implementation of FinCEN’s protocols for maintaining and disclosing beneficial ownership information. 

Comments on the rule are due on May 5, 2021 while FinCEN is due to present its final rule to Congress by Jan 1, 2022.

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