The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule establishing a beneficial ownership information reporting requirement.
The rule, pursuant to the Corporate Transparency Act (CTA), will require most corporations, limited liability companies, and other entities created in or registered to do business in the United States to report information about their beneficial owners to FinCEN. Beneficial owners are the persons who ultimately own or control the company.
The rule is designed to protect U.S. national security and strengthen the integrity and transparency of the U.S. financial system. Further, it will help stop criminal actors, including oligarchs, kleptocrats, drug traffickers, and human traffickers, as well as those who would use anonymous shell companies to hide their illicit proceeds.
“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,” Acting FinCEN Director Himamauli Das said. “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.”
This final rule is the culmination of years of bipartisan efforts by Congress, the Treasury, national security agencies, law enforcement, and other stakeholders. It addresses deficiencies in the U.S. anti-money laundering regime and meets the commitments made by the United States ahead of the December 2021 Summit for Democracy.
The rule will take effect on Jan. 1, 2024. Companies registered before Jan. 1, 2024, will have one year to file their initial reports, while reporting companies created after January 1, 2024, will have 30 days after creation or registration to file their initial reports. Once the initial report has been filed, both existing and new reporting companies will have to file updates within 30 days of a change in their beneficial ownership information.