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| 1 minute read

FinCEN’s First Guidance on Beneficial Ownership

On March 24, 2023, the Financial Crimes Enforcement Network (“FinCEN”) published its first set of guidance materials in understanding reporting requirements under the Corporate Transparency Act (“CTA”). Congress enacted the CTA on January 1, 2021 to establish uniform beneficial ownership information (“BOI”) reporting requirements for corporate entities in the United States to help prevent tax evasion, money laundering, sanctions evasion, and illicit finance. On September 29, 2022, FinCEN published a final rule implementing the BOI reporting requirements, defining “reporting companies” to include both U.S. domestic companies and foreign companies registered to do business in any U.S. state. Under the final rule, certain corporate entities, including limited liability companies and small businesses, must file BOI with FinCEN starting January 1, 2024.

In anticipation of these reporting requirements, FinCEN released a set of materials intended to address questions and concerns, including a document of Frequently Asked Questions, summaries of Key Filing Dates and Key Questions, an Introductory Video and a detailed Informational Video about the reporting requirements. These guidance materials include clarifying information on who is considered a beneficial owner of a reporting company, what companies will be required to report beneficial ownership information, exemptions to the reporting requirement, and what information the reporting company will have to report about itself and its beneficial owners. Himamauli Das, Acting Director of FinCEN, voiced the agency’s commitment to “making this transparency process as simple as possible” in its effort “to unmask shell companies and protect the U.S. financial system from abuse.” While the agency’s guidance is a good first-step designed to make the regulation more accessible for small businesses, many corporate entities with complex structures will await further guidance on more nuanced topics in complying with the CRA.


financial regulation