FinCEN Proposes Rule to Fight Illicit Finance, Boost Corporate Transparency

The Financial Crimes Enforcement Network (FinCEN) handed down a Notice of Proposed Rulemaking to “implement the beneficial ownership information reporting provisions of the Corporate Transparency Act (CTA),” according to an agency announcement Tuesday (Dec. 7).

The proposed rule is designed to “protect the U.S. financial system from illicit use and impede malign actors from abusing legal entities, like shell companies, to conceal proceeds of corrupt and criminal acts,” the FinCEN announcement says. “Such abuses undermine U.S. national security, economic fairness, and the integrity of the U.S. financial system.”

FinCEN’s proposal outlines who must report beneficial ownership information, when they must report and what information they must provide, among other things.

“FinCEN is taking aggressive aim at those who would exploit anonymous shell corporations, front companies, and other loopholes to launder the proceeds of crimes, such as corruption, drug and arms trafficking, or terrorist financing,” acting FinCEN Director Himamauli Das said in the announcement.

FinCEN’s proposal will be discussed during the upcoming Summit for Democracy and reflects the concerns outlined in the U.S. Government Strategy on Countering Corruption, which focuses on money laundering risks posed by anonymous shell companies and the need to protect the global financial system from abuse.

It also mirrors the work of the Financial Action Task Force and G7 and G20 leaders, who are working to keep “illicit actors” from trying to hide their wealth in shell companies.

Related: FinCEN Warns of Rise in Environmental Crimes

Last month, FinCEN said environmental crimes — including wildlife trafficking, illegal mining and hazardous substance trafficking — are on the rise. FinCEN said it’s focused on these crimes because of their ties to corruption and criminal organizations, which are FinCEN’s priorities.

FinCEN also recently unveiled its top priorities for battling money laundering and terror financing, with a focus on “cyber-enabled financial crime, ransomware attacks and the misuse of virtual assets that exploits and undermines their innovative potential, including through laundering of illicit proceeds.”