FinCEN Beneficial Ownership Guidance Released

Much of compliance is about making sure things are done the right way. Some of compliance is about waiting. Waiting for information from your customer. Waiting on final rules to be published. Waiting on effective dates to arrive, so that policy and procedure changes can be implemented. Patience is a virtue, but the process of becoming virtuous through waiting is about as unpleasant as it comes.

However, the wait for Beneficial Ownership guidance is over, at least in part, as FinCEN (the Financial Crimes Network of the U.S. Treasury Dept.) has released long-awaited guidance on the upcoming changes to the rules regarding the Beneficial Ownership Information Reporting Rule. Before we go forward, let’s take a quick step back to see how we got here.

In March 2020 the National Defense Authorization Act (NDAA) was introduced into the House. After months of debates and votes, it was passed by the senate, but vetoed by the President in December 2020. Over the following month, the House and Senate overrode the President’s veto and the Act became law in January 2021.  Sections 6001-6511 of the NDAA are known as the Anti-Money Laundering Act of 2020 (AML Act).  Inside of the AML Act, Sections 6401-6403 are known as the Corporate Transparency Act (CTA). As stated by FinCEN, the CTA in part establishes uniform beneficial ownership information reporting requirements for those entities required to provide beneficial ownership information to FinCEN.

The collection of Beneficial Ownership Information (BOI) has been a sore spot among bank customers since it became a requirement in May 2018 for legal entity customers opening new accounts. Banks have been confused about what is required, when it is required, and the specifics of complying with the rules. Individual beneficial owners of legal entity customers have been somewhere between hesitant and belligerent about providing personal information to banks since it is their entity and not themselves individually that is opening an account. The potential good news for banks, thanks to the upcoming changes, is that once FinCEN is the repository for this information, it could have an impact on a bank’s collection processes. It’s certainly clear from the comments to the proposed rule that various industry groups are unhappy with the current state of the Beneficial Ownership rules as well as the changes that are being made.

When will the changes officially happen? These regulations officially go into effect January 1, 2024, but companies already in existence prior to January 1, 2024 will have until January 1, 2025 to report their information to FinCEN. Undoubtedly there will be more to come from the Treasury Dept. on this matter, but for now, they have released lots of valuable guidance, which can be viewed on their website:

  1. Press Release
  2. Frequently Asked Questions
  3. Key Filing Dates
  4. Key Questions
  5. 55-second Introductory YouTube Video
  6. 4 minute 22 second BOI Details YouTube Video

Between now and the effective date of the rule, you undoubtedly will have questions and our hotline staff is prepared to help, so reach out whenever there’s something you need to know.