Changes to the Bank Secrecy Act incorporated into the National Defense Authorization Act (NDAA) contain requirements for beneficial ownership disclosure by covered legal entities at the time of their creation for inclusion in a database that will be accessible by USA and foreign law enforcement, regulators, and AML compliant US financial institutions. Why is there a perception that the US is a tax haven? The perception stems from LACK OF:
- USA participation in the Common Reporting Standard (CRS)
- USA reciprocity under Intergovernmental Agreements (IGA) with other countries under FATCA
- USA laws requiring the revelation of beneficial ownership of US corporations
- Comprehensive Anti-Money Laundering (AML) measures in the non-financial sector: lawyers, accountants, real estate agents, trust, and company service providers
NDAA’s adopts the Corporate Transparency Act (“CTA”)
The CTA calls for transparent incorporation practices:
- When forming a corporation or limited liability company under the laws of a State (or Indian Tribe), the applicant shall file a report with FinCEN containing a list of the beneficial owners of the corporation or limited liability company that identifies each beneficial owner by:
• full legal name
• date of birth
• current residential or business street address
• a nonexpired passport issued by the United States
• a nonexpired identification document issued by a State, local government, or Indian Tribe to the individual acting for the purpose of identification of that individual
• a nonexpired driver’s license issued by a State
• a nonexpired passport issued by a foreign government - Each corporation or limited liability company formed under the laws of a State (or Indian Tribe shall) shall submit to FinCEN an annual filing containing a list of:
• current beneficial owners of the corporation or limited liability company and the identification information
• changes in the beneficial owners of the corporation or limited liability company
• update to the list of the beneficial owners of the corporation or limited liability
Going forward, it will be unlawful to:
- provide, false or fraudulent beneficial ownership information, including a false or fraudulent identifying photograph, to FinCEN and
- fail to provide complete or updated beneficial ownership information to FinCEN
THEREWILL BE CIVIL AND CRIMINAL PENALTIES FOR THE MISUSE OR UNAUTHORIZED DISCLOSURE OF BENEFICIAL OWNERSHIP INFORMATION
Financial Institutions play a key role in the fight against money laundering and financial crimes. Consequently, Financial Institutions ought to be prepared to comply with the requirements of the CTA to assist with the establishment of a secure national UBO database.
Financial Institutions whose current Customer Due Diligence and BSA/AML programs may not be appropriately robust ought to obtain the proper consulting and training advice from a specialized BSA/AML provider.
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