T Beneficial Ownership The latest final rule on beneficial ownership information (BOI) reporting gives financial institutions and their business clients more details about what’s required. Here’s a rundown of what’s behind the new rules, the latest BOI registry details and how anti-money laundering (AML) programs can prepare. Why Is Beneficial Ownership Reporting Required? Effective Jan. 1, 2024, many companies are required to begin reporting to the U.S. government information about beneficial ownership or who ultimately owns or controls them. U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) recently issued a new regulation on the requirements, including how AML staff will access the information through a new federal beneficial ownership information (BOI) registry. However, much of the process has not been finalized or is broad in terms. This uncertainty is confusing financial institutions and their business clients. What’s clear so far is that the Corporate Transparency Act (CTA) mandated the creation of a database for obtaining and holding BOI for certain U.S. entities. As described below, approximately 35 million reporting entities will have a year to provide information on their beneficial owners to FinCEN’s new registry. The CTA was aimed at satisfying global criticism, particularly from the Financial Action Task Force (FATF), that the U.S. is a haven for money launderers due to a lack of transparency and loopholes allowing shell companies to hide the true nature and ownership of a business. The more critical potential outcome of BOI reporting is assisting law enforcement in solving financial crime. BOI Reporting Responsibilities: Who and When What changes will reporting entities see now that FinCEN has launched the federal BOI registry? FinCEN has published two rulemakings regarding the registry and related requirements. Below is a short recap of each. The descriptions aren’t all-inclusive and don’t constitute legal advice. The Final Rule for Beneficial Ownership Reporting, issued in Sept. 2022, establishes definitions for reporting provisions of the FinCEN BOI database. Some key provisions of this rule for the beneficial ownership changes in 2024 include the following: • The rule is effective as of Jan. 1, 2024. • Reporting companies created or registered before Jan. 1, 2024, have one year (i.e., Jan. 1, 2025) to file their initial BOI reports. FINAL RULE AND ITS IMPACTS ON AML PROGRAMS By Terri Luttrell, CAMS-Audit, CFCS, Abrigo Colorado Banker 8
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