Securities and Exchange Commission, and other categories of financial services companies are notably included in the list of entities exempt from the reporting requirements. What is in the Report? A reporting company must identify each (i) beneficial owner of the reporting company, and (ii) applicant of the reporting company. Beneficial owners are individuals that exercise “substantial control” over a reporting company or own or control 25% or more of the ownership interests of the reporting company. Company applicants are individuals that directly file the document that creates the reporting company or are primarily responsible for directing or controlling the filing of the relevant document by another, if one or more individual is involved in the filing. The following information is required for each beneficial owner and applicant: (a) full legal name, (b) date of birth, (c) current residential or business street address, (d) unique identifying number from an acceptable identification document (passport, driver’s license, etc.), and (e) an image of the identification document. Individuals may obtain a unique FinCEN identifier by reporting the information required above directly to FinCEN and thereafter may submit the FinCEN identification number in lieu of the requirements above. The reporting company must also report the following information about itself: (A) full legal name, (B) any trade names, (C) complete current address (excluding PO boxes or corporate formation agents), (D) state, tribal, or foreign jurisdiction of formation, (E) the U.S. jurisdiction where a foreign reporting company first registered, and (F) Taxpayer Identification Number. When is the Report Due? The formation/filing date of the reporting company determines when the CTA report is due. If the reporting company was formed/registered before Jan. 1, 2024, the reporting company has until Jan. 1, 2025 (one year after the effective date) to complete the report; provided, however, information regarding company applicants is not required. If the reporting company is formed/registered after Jan. 1, 2024, the report must be filed within 30 days of the earlier of the date it received actual notice of its creation/registration, or the creation/registration of the reporting company becomes public. Why Does the CTA Benefit Financial Institutions? FinCEN is required to store the CTA report information in a secure nonpublic database known as the Beneficial Ownership Secure System (“BOSS”). A financial institution subject to customer due diligence requirements like the CDD or other anti-money laundering regulations may request information from BOSS to facilitate the bank’s reporting compliance; provided, however, the bank must obtain the reporting company’s consent to request the information. BOSS stands to not only help reduce fraud and criminal activity in the U.S. economy through information availability, but also simplify and significantly reduce the information reporting burden on the financial services industry. For avoidance of doubt, the CTA does not eliminate reporting requirements of financial institutions regarding their customers, but simply requires those customers to already report that information in a format more readily accessible to financial institutions. The effective date of the CTA is less than a year away, but banks still have plenty of time to prepare to utilize the CTA to their advantage. Financial institutions should review and revise existing privacy policies and customer agreements to provide for bank access to CTA information, revise loan document forms to include representations, warranties, and covenants related to the CTA, and provide internal training regarding the requirements and opportunities presented by the CTA. A financial institution subject to customer due diligence requirements like the CDD or other anti-money laundering regulations may request information from BOSS to facilitate the bank’s reporting compliance… Drew A. Proudfoot is a partner in the Morgantown office of the regional law firm Bowles Rice. He specializes in corporate and financial services transactions, including commercial lending, mergers and acquisitions, and business succession planning. Contact Drew at (304) 285-2566 or dproudfoot@bowlesrice.com. Amy J. Tawney is a partner in the Charleston office of Bowles Rice. She focuses her practice on banking law, mergers and acquisitions, securities law, and regulatory matters. Contact Amy at (304) 347-1123 or atawney@bowlesrice.com. 15 wvbankers.org
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