US: ACCESS TO BENEFICIAL OWNERSHIP INFORMATION IS GETTING WIDER

More and more entities will have access to information about the beneficial ownership of companies recorded by the US government’s Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA).

The CTA, lately enacted into law as part of the National Defense Authorization Act, amended the country’s anti-money laundering regulation. In particular, it directed the US Department of the Treasury to promulgate rules that require certain “regulated entities” to file information concerning beneficial owners and company applicants with the FinCEN.

This way information will be aggregated in a database available to selected authorities (domestic and foreign), financial institutions and regulatory agencies.

On 16^th December 2022, US Treasury has issued a Notice of Proposed Rulemaking (NPRM) to establish who may request beneficial ownership information (BOI) that will be reported to FinCEN starting on January 1, 2024.

The NPRM addresses not only how authorized recipients can obtain and use the BOI, but also how they must secure them and the penalties for failing to follow the applicable requirements.

It turns out that with this new proposal the number of entities, agencies and authorities to which such data may be disclosed is quite wide.

From now on, under certain circumstances BOI may be disclosed to:

federal agencies engaged in national security, intelligence or law enforcement activities;
state and local law agencies with court authorization;
financial institutions required to perform customer due diligence (CDD) – hereby including banks, trust companies, credit unions, mutual funds, brokers or dealers in securities, futures commission merchants and introducing brokers in commodities – and regulators supervising them;
US Treasury officers and employees (under certain circumstances);
foreign law enforcement agencies, prosecutors, judges and other agencies for compliance or enforcement purposes (hereby including both criminal and civil investigations and actions) that meet specific criteria.

After the publication of the proposal rulemaking, a consultation phase has opened: stakeholders may submit their comments to the NPRM till February 14, 2023.

This proposal is the second of three rulemakings aiming to implement the CTA and it follows the BOI Reporting Rule finalized on September 30, 2022 requiring most corporations, limited liability companies and other similar entities created in or registered to do business in the United States to report information about their beneficial owners to FinCEN.

The third planned rulemaking will revise FinCEN’s CDD rule no later than one year after the effective date of the BOI Reporting Rule (January 1, 2024).

SOURCE: Financial Crimes Enforcement Network (FinCEN)

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