The Financial Crimes Enforcement Network of the US Department of the Treasury has issued a final rule implementing the beneficial ownership reporting provisions of the Corporate Transparency Act. The rule, which will take effect on January 1, 2024, addresses the use of shell companies by illicit actors to launder money, hide assets, and evade sanctions, while attempting to limit the damage caused by these activities to the US economy and to US national security.
The rule reflects input by members of Congress, government officials, small businesses, advocacy groups, trade associations, the financial industry, and law enforcement. The rule requires certain companies to file a Beneficial Ownership Report.
The rule:
- describes which domestic and foreign companies need to report, and delineates the type of entity exempt from the rule, and;
- defines beneficial ownership and its attributes, including substantial control, along with the term company applicant.
For entities that are subject to the rule, the names, birthdates, addresses, unique identifying numbers and issuing jurisdictions must be reported for each beneficial owner. Reporting entities created or registered before January 1, 2024 will have one year to file their initial reports, while newer companies must report within 30 days of registration. Aspects of the rule that remain to be decided are who may access beneficial ownership reports filed under the new rule, for what purpose, and how the data will be safeguarded.