FinCEN begins consultation on beneficial ownership reporting

The Financial Crimes Enforcement Network (FinCEN) recently issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit public comment on questions related to the implementation of the beneficial ownership information reporting provisions of the Corporate Transparency Act (CTA), which came into force on 1 January 2021 as part of the

The CTA will require corporations, limited liability companies and ‘similar entities’ to report certain information about their beneficial owners. These information will be stored in a database developed by FinCEN, which will not be available to the public, but will be accessible to specific categories of recipients, including federal law enforcement.

The main questions to be resolved are:

  1. whether the law will apply to partnerships and trusts;
  2. the exact definition of ‘reporting company’ and ‘beneficial owner’, with clarifications on whether the current  ‘ownership and substantial control’ tests are sufficiently clear;
  3. the reporting obligations for entities with complex structures, which might be forced to disclose full chains of ownership, raising  confidentiality concerns.