On December 7th, the Financial Crimes Enforcement Network (FinCEN) released a proposed new rule in order to implement the beneficial ownership information reporting provisions of the Corporate Transparency Act (CTA). The proposed rule is designed to reduce money laundering and make it harder for criminals to conceal proceeds of corrupt and criminal acts. According to FinCEN, money laundering undermines US national security, economy, and the integrity of the US financial system. Further, FInCEN states that collecting information on beneficial owners and their agents, and giving access to it to law enforcement, financial institutions, and other authorized users will diminish the ability of bad actors to hide, move, and enjoy the proceeds of their illegal activities.
The proposed rule states who must report beneficial ownership information, when it must be reported, and what information must be provided to the US government. The CTA, part of the Anti-Money Laundering Act of 2020, established beneficial ownership information reporting requirements for corporations, limited liability companies, and other entities domiciled in or registered to do business in the United States. The rule establishes how the reporting requirements for US companies will be implemented.
Under current Federal rules, many US companies are not required to report and identify the true owner of their operations. The current rules allow owners of US companies to obscure their true identities by using agents who register companies on their behalf.
Under the proposed rules, primary owners of US companies and non-US companies that are registered to do business in the U.S. will have to provide their name, birth date, address and a unique identifying number, such as social security, from an approved identification document. Once that information is collected, it will be stored in the confidential federal corporate beneficiary ownership database and made available to law enforcement and financial institutions such as banks. These will help US banks, which are required to vet their customers as part of their know-your-customer (KYC) process, to prevent money laundering and other illegal activities.
The new rule is subject to a notice and comment period and is not yet in effect. If you have questions about what the new anti-money laundering rule means for your company, contact us, your trusted business lawyers in Miami, FL.
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