On July 8, 2024, the Financial Crimes Enforcement Network (“FinCEN”) published Frequently Asked Questions to help U.S. companies comply with the Beneficial Ownership Information Reporting Rule and Beneficial Ownership Information Access and Safeguards Rule. FinCEN emphasized that the FAQs are explanatory in nature and are not intended to supplement or modify any statutory or regulatory obligation.
The FAQs were issued just a week after FinCEN issued a notice of proposed rulemaking (“NPRM”), on June 28, 2024, that would require U.S. financial institutions to strengthen and modernize their anti-money laundering and countering the financing of terrorism (“AML/CFT”) programs. FinCEN reported that the proposed rule is intended to compel financial institutions to design AML/CFT programs that incorporate government-wide priorities and promote consistency in FinCEN’s requirements for different types of financial institutions, in an effort to protect U.S. national security and the integrity of the U.S. financial system.
The proposed rule would require financial institutions to establish, implement, and maintain reasonably designed AML/CFT programs that will meet certain minimum requirements and effectively address a company’s particular risk profile. Under the proposed rule, AML/CFT programs, at minimum, must include the following components: “(1) the development of internal policies, procedure and controls; (2) the designation of a compliance officer; (3) an ongoing employee training program; and (4) an independent audit function to test programs.” Financial institutions would also be required to engage in an assessment process that would force companies to identify and evaluate their AML/CFT risks and assess their vulnerability to other illicit finance activities.
FinCEN – Beneficial Ownership Information FAQs | FinCEN Press Release – AML/CFT Proposed Rule | FinCEN Fact Sheet – AML/CFT Proposed Rule | Federal Register – NPRM