Latest Update to Beneficial Ownership Reporting

Posted on by Stephanie Schumacher, CAMS

As you’re probably already aware, FinCEN issued the Beneficial Ownership Information Access and Safeguards Rule (Access Rule) on December 22, 2023. This rule implements portions of the Corporate Transparency Act (CTA) and authorizes certain persons access to information reported to FinCEN regarding reporting companies, beneficial owners, and company applicants (BOI).

On February 20, 2024, the effective date of the Access Rule, FinCEN published a Small Entity Compliance Guide for Beneficial Ownership Information Access and Safeguards Requirements. You can find the guide here.

Key things to note about the latest rulemaking and update:

  • The Access Rule does not impose a new requirement for financial institutions.
  • The Rule does not create a supervisory expectation that FI’s have access or use the data obtained by FinCEN.
  • Financial Institutions do not have access to BOI yet. FinCEN is phasing the access roll out.
  • The Guide summarizes permissible uses for when FI’s may access/use the BOI
    • Examples of permissible uses:
      • customer identification requirements (e.g., “KYC”);
      • Enhanced Due Diligence (EDD) required under the BSA (e.g., 31 CFR 1010.610);
      • Suspicious Activity Report (SAR) filing;
      • Sanctions compliance;
      • AML/CTF investigations.
    • Uses that are not permissible:
      • Sales practices;
      • Extension of credit;
      • Other general business activities.

The Guide further outlines Security and Confidentiality requirements, including security standards and geographic restrictions, customer consent, and certification (future guidance will be provided by FinCEN on this).

There is no action required by FI’s at this time, but understanding the landscape and newest regulations will help prepare for future changes. The CTA does require future revisions to the CDD Rule and that is where we anticipate the largest impact. FinCEN has indicated that these revisions will coincide with FI’s access to the BOI system. Proposed rulemaking is anticipated later this year.

If you’re interested in learning more about the changes to Beneficial Ownership, check out this webinar from last December.