WASHINGTON — The Financial Crimes Enforcement Network proposed criteria for which companies must report beneficial-owner information under an anti-money-laundering law passed by Congress earlier this year.
Under the proposal, a beneficial owner would be anyone with "substantial control" over the company or who owns at least 25%, according to a fact sheet released by the Treasury Department on Tuesday.
The proposal outlines activities that qualify as substantial control. "This list would capture anyone who is able to make significant decisions on behalf of the entity," the fact sheet said.
"FinCEN's approach is designed to close loopholes that would allow corporate structuring that obscures owners or decision-makers," according to the fact sheet. "This is crucial to unmasking shell companies."
The proposal would implement the Corporate Transparency Act, a law strongly supported by banks because it would shift true-owner reporting requirements to an incorporating company and away from its financial institution. Fincen rules predating the legislation require banks to collect and report the information on their customers.
Yet Fincen, a bureau of Treasury, is not yet revising banks’ customer due diligence rules. According to the fact sheet, the agency will address that in a separate rulemaking after the beneficial owner reporting rule is finalized.
In a statement, Treasury Secretary Janet Yellen called the proposal “a major step toward addressing the gaps in our corporate transparency framework that allow corruption to flourish and illicit funds to flow into the United States.”
The public has 60 days to comment on the proposal once published in the Federal Register, Fincen said, with an anticipated deadline of Feb. 7, 2022. That timetable will push the government’s implementation schedule
According to the fact sheet, Fincen’s proposed rule would apply to domestic companies “created by the filing of a document with a secretary of state or similar office under the law of a state or Indian tribe,” including corporations and limited liability companies. It would likely apply to "limited liability partnerships, limited liability limited partnerships, business trusts, and most limited partnerships.”
Fincen also outlined the four types of information its proposal would mandate from beneficial owners: their name, birthdate, address and some kind of unique identification number, such as a taxpayer identification number.
"If an individual provides his or her BOI to FinCEN, the individual can obtain a 'FinCEN identifier,' which can then be provided to FinCEN in lieu of other required information about the individual," the fact sheet said.
