The Financial Crimes Enforcement Network of the US Department of the Treasury has issued an advance notice of proposed rulemaking on the subject of beneficial ownership reporting by corporations, limited liability companies and other entities. The purpose of the new rule will be to implement Section 6403 of the Corporate Transparency Act, which requires companies to submit information about the persons who own or control them, and aims to close gaps in the existing regulatory framework requiring banks, broker-dealers, mutual funds and commodities brokers to perform due diligence on their customers. The CTA is part of the Bank Secrecy Act, enacted in 1970 and amended by the Anti-Money Laundering Act of 2020.
The CTA requires a “reporting company” to provide specific information to FinCEN about each beneficial owner, including the name, date of birth, address, and official ID number. The CTA defines “reporting company” – with some exceptions -- as a corporation, LLC or other similar entity that is created by the filing of a document with a secretary of state or equivalent official, or formed under the law of a foreign country and registered to do business in the US. FinCEN is required to maintain the beneficial ownership information in a secure, non-public database for at least five years after termination of the company.
FinCEN seeks input on both the reporting and data storage elements of the CTA. The public has 30 days to submit comments.
Read Willkie’s client alert on the CTA, and the rest of the Anti-Money Laundering Act of 2020, by clicking here.