FinCEN Issues Final Rule for Beneficial Ownership Information Reporting Requirements Under the Corporate Transparency Act

December 15, 2022

Introduction

On September 29, 2022, the Financial Crimes Enforcement Network (“FinCEN”) issued a final rule (the “Final Rule”) implementing the beneficial ownership and company applicant information reporting requirements set forth in the Corporate Transparency Act (“CTA”).[i]  The Final Rule is intended to “protect the U.S. financial system by making it more difficult for bad actors to conceal their financial activities through entities with opaque ownership structures.”

The Final Rule largely adopts the provisions of the Notice of Proposed Rulemaking published by FinCEN on December 8, 2021 (the “Proposed Rule”) (see our prior alert).

The Final Rule requires certain domestic and foreign entities that do not fit into enumerated exemptions to file reports with FinCEN that include:

  1. basic information about the reporting companies;
  2. certain identifying information about its beneficial owners (the individuals who ultimately own or control the entities); and
  3. company applicants (those who file to form the entities).[ii]  

These reports will need to be filed by companies formed after January 1, 2024 within 30 days of formation and by January 1, 2025 for companies existing before January 1, 2024. FinCEN will maintain the reportable information in a secure, non-public database, and, given the sensitive nature of the information being reported, is authorized to disclose such information only to a statutorily defined group of governmental authorities and financial institutions in limited circumstances.[iii] 

This alert summarizes the key clarifications and modifications to the Proposed Rule that are formalized in the Final Rule and describes (1) which entities are subject to the reporting requirements, (2) what information is required to be reported, and (3) the reporting timeframes in which entities are required to submit reports. 

To continue reading our alert on this topic, please click here.

[i] Beneficial Ownership Information Reporting Rule Fact Sheet, September 29, 2022, https://www.fincen.gov/beneficial-ownership-information-reporting-rule-fact-sheet

[ii] Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. 59498 (Sept. 30, 2022).

[iii] Id., at 59507.