New FinCEN Transparency Rules Require Naming Beneficial Owners

FinCEN Warns of Rise in Environmental Crimes

In a bid to crack down on illicit finance, the Financial Crimes Enforcement Network (FinCEN) has issued a final rule creating a beneficial ownership information reporting requirement.

The rule will require most corporations, limited liability companies, and other companies established in or registered to do business in the United States to report information about their beneficial owners, the people who own or control the company, according to a FinCEN news release.

See also: FinCEN Proposes Rule to Fight Illicit Finance, Boost Corporate Transparency

FinCEN, a division of the U.S. Treasury, said in the release the rule will stop criminals who try to use anonymous shell companies to conceal their illegal income.

“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,” said Acting FinCEN Director Himamauli Das in the release. “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 rule goes into effect Jan. 1, 2024, giving reporting companies created or registered before that date one year to file their initial reports, according to the release. Companies created after that date will have 30 days to submit their first report.

Sarah Feldman of the information services firm Wolters Kluwer wrote this week that some companies are exempt from the rule, mostly those “that are already subject to substantial federal or state regulation under which their beneficial ownership may already be known.”

Among them are companies that file reports with the Securities and Exchange Commission (SEC), governmental authorities, banks, credit unions, money services businesses, investment advisors, securities brokers and dealers, and insurance companies.

The news comes a week after Wall Street regulator the Financial Industry Regulatory Authority (FINRA) issued new guidance for broker-dealers on the penalties they could face for violating anti-money laundering (AML) rules.

Read more: FINRA Debuts Tougher Money Laundering Rules