NEBANKERS.ORG 22 COMPLIANCE ALLIANCE Roger Morris, Jr., JD, Hotline Advisor and Associate General Counsel FinCEN Seeks Comments on Changes to Beneficial Ownership Reporting IN EARLY DECEMBER, THE U.S. FINANCIAL CRIMES Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking implementing Section 6403 of the Corporate Transparency Act (CTA), which allowed the public until Feb. 7, 2022, to review and comment on the proposed rules. According to the proposed rulemaking, the ability to operate through legal entities without requiring the identification of beneficial owners is a key risk for the U.S. financial system. Therefore, the CTA seeks to set a clear federal standard for incorporation practices, protect vital U.S. national security interests, protect interstate and foreign commerce, better enable various law enforcement agencies to counter illicit activities and bring the U.S. into compliance with international standards. If enacted, these rules would add a number of government reporting requirements to certain entities, and financial institutions could have access to this information which could possibly ease the burden of customer due diligence. The purpose of the CTA is to curtail illicit use of the U.S. financial system by forming a centralized government database of beneficial ownership information that certain institutions and the government could access. To create this database, the proposed rules would require certain entities to report specific information about their “beneficial owners,” as FinCEN looks to eventually create a beneficial ownership registry. Banks with customer due diligence requirements are very familiar with “beneficial owners” as they are currently required to collect such information at account opening. FinCEN defines a “beneficial owner” as every individual who, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise, exercises
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