Effective January 1, corporations, limited liability companies, and similar entities will be mandated to report specific details about their beneficial owners, defined as "the individual natural persons who ultimately own or control the companies." This information, including full legal names, addresses, and a unique identification number, will be stored in a confidential database known as the BOI registry, administered by FinCEN.
The recently released access rule for FinCEN's BOI registry, scheduled for publication in the Federal Register, outlines the entities permitted to access the database. Access will be granted to federal law enforcement agencies using appropriate protocols, federal agencies meeting requests from certain foreign entities, the U.S. Treasury and its agents, and state, local, and tribal law enforcement agencies with a court order. Financial institutions can also access the database under the protocols while complying with FinCEN's 2016 customer due diligence (CDD) rule.
The access rule is set to become effective 60 days after its publication in the Federal Register. Responding to feedback from the banking industry, FinCEN has broadened the definition of access purposes for financial institutions. The original proposal limited access to "customer due diligence requirements under applicable law." The final rule now encompasses a more comprehensive definition, allowing access for "Any legal requirement or prohibition designed to counter money laundering or the financing of terrorism, or to safeguard the national security of the United States, to comply with which it is reasonably necessary for a financial institution to obtain or verify beneficial ownership information of a legal entity customer."
Gary Kalman, executive director of Transparency International U.S., commended the expanded definition, stating, "FinCEN also made important and pragmatic changes to allow beneficial ownership information to be used by financial institutions for the full array of legally required know your customer protocols, including screening for possible sanctions violations and identifying other types of illicit financial activity."
Financial institutions seeking to search the BOI registry must implement safeguards to protect the information, following the same security procedures they use for customers' nonpublic information, according to a FinCEN fact sheet. The American Bankers Association (ABA), which supported the establishment of the BOI registry, expressed satisfaction with the final rule, incorporating many of its recommended changes. ABA President Rob Nichols noted, "These improvements will help enable the registry to deliver on its promise of providing law enforcement and financial institutions with highly useful information: the true owners of businesses." FinCEN is still expected to undergo a third rulemaking to align its CDD rule with the Corporate Transparency Act.
By fLEXI tEAM