April 2021 Foodman website and JD Supra
FinCen BOI BOI de FinCEN

The CTA is a recent reporting requirement that is expected to enhance U.S. national security through increasing the difficulty involved for harmful actors to exploit opaque legal structures for laundering money, financing terrorism, proliferating weapons of mass destruction, trafficking humans, and drugs, and committing tax fraud and other crimes. 

Included in the AML Act of 2020 which became law on January 1, 2021, it amends the Bank Secrecy Act to require corporations, limited liability companies, and similar entities to report certain information about their beneficial owners (the individual natural persons who ultimately own or control the companies). 

The CTA requires FinCEN to maintain the reported beneficial ownership information in a confidential, secure, and non-public database, authorizes FinCEN to disclose beneficial ownership information subject to appropriate protocols and for specific purposes to several categories of recipients, such as federal law enforcement,    requires FinCEN to revise existing financial institution customer due diligence regulations concerning beneficial ownership through considering the direct reporting of beneficial ownership information, brings the U.S. into coordination with international AML/CFT standards, sets a clear federal standard for incorporation practices, protects vital U.S. national security interests, protects interstate and foreign commerce and enables critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activities.

On April 01, 2021, FinCEN issued an Advance Notice of Proposed Rulemaking (ANPRM) soliciting public comment on or before May 5, 2021  concerning the implementation of the beneficial ownership information reporting provisions of the  CTA.   

The U.S. government identifies the difficulty with obtaining accurate up-to-date beneficial ownership information as a  fundamental risk that U.S. Financial Institutions cannot completely mitigate via their historical due diligence efforts; and consequently, as a critical priority for strengthening the U.S. AML and CFT regime.  

The ANPRM seeks:

  • Initial public input regarding procedures and standards of reporting companies for submitting information to FinCEN about their beneficial owners (the individual natural persons who ultimately own or control the reporting companies) as required by the CTA.
  • Initial public input concerning FinCEN’s implementation of related provisions of the CTA  governing FinCEN’s maintenance and disclosure of beneficial ownership information subject to appropriate protocols.

FinCEN seeks input on how FinCEN should implement a system to maximize benefits while minimizing burdens on reporting companies

There are 48 questions proposed in the ANPRM.  FinCEN strongly encourages all parties that would be affected by the beneficial ownership information reporting provisions or who would seek access to reported beneficial ownership information, to submit written comments at: 

Federal E-rulemaking Portal: http://www.regulations.gov.   Follow the instructions for submitting comments. Refer to Docket Number FINCEN-2021-0005 and RIN 1506-AB4

Will your Financial Institution be ready for the CTA?

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