On September 29, 2022, the Financial Crimes Enforcement Network (“FinCEN”) issued the first of three final rules (the “Final Rule”) implementing the Corporate Transparency Act (“CTA”). This Final Rule, which largely adopts the provisions of FinCEN’s December 2021 Proposed Rule, addresses beneficial ownership reporting requirements. Subsequent rulemakings will address (i) access to and safeguards around information in the contemplated beneficial ownership information database and (ii) revisions to FinCEN’s existing customer due diligence (“CDD”) rule for financial institutions (which currently remains in place).
As discussed in our prior client alert, under the CTA, which was passed as part of the 2020 Anti-Money Laundering Act (“AMLA”), Congress created a new federal framework for the reporting, disclosure, and use of beneficial ownership information. The CTA aims to combat the illicit use of shell companies to hide the proceeds of crime, and to transfer some of the burden of identifying the owners of such companies from financial institutions to the government itself.
The timing of the next two rulemakings under the CTA remains unclear. FinCEN has announced no schedule, and FinCEN’s AMLA-related rulemaking processes are running behind the deadlines set out in the statute. In addition to promulgating these additional rules, FinCEN must also develop the technological infrastructure to receive, store, and provide regulated access to the beneficial ownership information that will be reported pursuant to this Final Rule.
This alert summarizes seven key takeaways from the Final Rule.
Back
