Updated: Oct 1, 2022
The US Financial Crimes Enforcement Network (FinCEN) announced its final rule today on implementing Beneficial Ownership reporting requirements.
Beneficial Ownership Information (BOI) reporting requirements are part of the US Corporate Transparency Act (CTA) and would "improve FinCEN's ability" to protect the US financial system from "illicit usage," according to the organisation.
FinCEN stated in a statement that it has made a "historic step" in assisting the US government's efforts to combat dirty money.
“The rule will enhance the ability of FinCEN and other agencies to protect US national security and the US financial system from illicit use and provide essential information to national security, intelligence and law enforcement agencies,” added FinCEN.
The new rule, according to FinCEN, will "strengthen the integrity of the US financial system by making it more difficult for criminal actors to employ shell corporations to launder their money or hide assets."
Recent geopolitical events, according to the Treasury's Financial Enforcement division, had "confirmed" the argument that illicit actors' abuse of corporate entities, particularly shell firms, posed a "direct threat" to US national security.
FinCEN was quick to emphasise that the new requirements aim to "minimise burdens" on small firms and other reporting entities, and stated that preparing and submitting an initial BOI report will cost around $85 per.
The BOI guidelines will compel reporting businesses to make reports with FinCEN that identify two types of individuals: beneficial owners of an entity and entity applicants.
US Treasury Secretary Janet Yellen said: “Today’s announcement is a major step forward in giving law enforcement, national security agencies, and other partners the information they need to crack down on criminals, corrupt individuals, and other bad actors who seek to take advantage of America’s financial system for illicit purposes.”
She added: “This rule builds on years of bipartisan work by Congress, Treasury, national security and law enforcement agencies, and other stakeholders to bolster corporate transparency while minimizing the impact of compliance on honest businesses.”
“Critically, this rule will also greatly further our Administration’s work to fight corruption and its corrosive effects on our democracy and the rule of law – both at home and around the world,” said Sec. Yellen.
Acting FinCEN Director Himamauli Das said: “For too long, it has been far too easy for criminals, Russian oligarchs, and other bad actors to fund their illicit activity by hiding and moving money through anonymous shell companies and other corporate structures right here in the United States.”
He added: “This final rule is a significant step forward in our efforts to support national security, intelligence, and law enforcement agencies in their work to curb illicit activities. The final rule will also play an important role in protecting American taxpayers and businesses who play by the rules, but are repeatedly hurt by criminals that use companies for illegal reasons.”
The rule will go into force on January 1, 2024. Companies that were registered before that day will have one year to file their initial reports, while those registered after that date will have 30 days.
By fLEXI tEAM