On December 8, 2021, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) published a Notice of Public Rulemaking (NPRM) and a Fact Sheet outlining the first of three sets of rulemakings to implement Section 6403 of the Corporate Transparency Act (CTA). The CTA requires reporting companies to report beneficial ownership and company applicant information (BOI) to FinCEN. The reported information will be maintained in a registry overseen by FinCEN and accessible by law enforcement and financial institutions to help prevent money laundering and other illegal activities.
Notably, the CTA and NPRM exempts 23 types of entities, including banks and credit unions, from the new reporting requirements.
Existing reporting companies will have one year from the date of the final regulation to file a BOI report, and newly formed reporting companies will have 14 days after their formation to do so. The NPRM specifies that BOI reports must be in the form and manner prescribed by FinCEN and must identify BOI by: (1) full legal name, (2) date of birth, (3) current residential or business street address, and (4) unique identifying number from an acceptable identification document; or, if this information has already been provided to FinCEN, by a FinCEN identifier.
The existing Customer Due Diligence (CDD) Rule requires financial institutions to identify and verify the beneficial owners of legal entity customers when opening new accounts as part of their customer due diligence programs. This NPRM does not modify the CDD Rule, however FinCEN is expected to modify the CDD Rule consistent with Section 6403(d) of the CTA in a later NPRM as they develop the technological infrastructure to administer CTA requirements.
The comment period for the NPRM is open for sixty days until February 7, 2022.