In its first year, the requirements of the agency's beneficial ownership register are expected to cost reporting corporations a total of $22.7 billion, according to the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department.
More than 32 million reporting firms will be needed to submit initial beneficial ownership reports in Year 1 of the register (2024), according to FinCEN's projections in a notice for request and comment published in the Federal Register on Tuesday. $21.7 billion for first reports and $1 billion for revised reports make up the expected total expenditures for those companies. When the reporting entity's ownership changes materially, updated reports are necessary.
A little under 5 million businesses will submit reports to the registry overall in Year 2, according to FinCEN. The total cost to businesses in Year 2 for initial reports will be between $425.6 million and $13.1 billion; for updated beneficial ownership reports, this cost will be between $547 million and $8.1 billion.
In the first year, the time required by entities to prepare and submit documents to the beneficial ownership registry would range from 90 minutes to roughly 11 hours. Whether the entity has a simple or complex operating structure will determine the difference in time, according to FinCEN.
The beneficial ownership registry rule from FinCEN was approved in September, and it will go into effect on January 1st, 2024. According to the rule, reporting entities (both domestic and foreign) must also submit FinCEN with beneficial ownership information when submitting incorporation documents to secretaries of state or tribal governments. The registry is intended to help FinCEN and law enforcement identify and apprehend those responsible for money laundering, funding terrorist organizations, and other financial crimes by enabling them to understand who owns businesses and shell companies.
The rule would exempt 23 different categories of businesses from the definition of "reporting company." According to previous statements made by FinCEN, many of the exemptions—for public companies, banks, insurers, brokers, investment advisers, accounting firms, public utilities, and more—are already "subject to substantial federal and/or state regulation or already have to provide their beneficial ownership information to a governmental authority."
In a proposal released in December, FinCEN suggested limiting access to the registry to specific federal agencies, state, local, and tribal law enforcement organizations that have obtained a court's approval, financial institutions with customer due diligence requirements, bank regulators overseeing the due diligence practices of financial institutions, foreign law enforcement organizations, prosecutors, judges, and other organizations that meet particular requirements, as well as Treasury officers and personnel. The general public will not have access to the registry.
By fLEXI tEAM