Legal Updates FinCEN Publishes Guidance About Beneficial Ownership Reporting and Requests Comment on Extending Deadlines By Kenneth C. Rudd | October 6, 2023 Recently, the Financial Crimes Enforcement Network (“FinCEN”) has taken important steps that affect small business and their reporting obligations with regard to their beneficial ownership under the Corporate Transparency Act (“CTA”). In sum, the CTA requires both domestic and foreign corporations, LLCs and other entities created by filing a document with the secretary of state or similar office, unless exempt (and exemptions are broad, particularly for larger companies), to report to FinCEN the individuals who directly or indirectly exercise substantial control or own or control 25% or more of the company. The intent of this reporting is, in sum, to assist the Government in combatting money laundering and the financing of terrorism. The regulation implementing the beneficial ownership reporting requirements of the CTA, 31 C.F.R. §1010.380, becomes effective January 1, 2024. In September 2023, FinCEN published its Small Entity Compliance Guide concerning Beneficial Ownership Information (“BOI”). The Guide is intended to help businesses determine if they are subject to the reporting requirements of the CTA and comply. Beginning January 1, 2024, companies that are subject to the reporting requirements will be required to submit reports to FinCEN concerning their beneficial ownership. Reporting companies created or registered before January 1, 2024 will have until January 1, 2025 to file their initial reports, but those created or registered on or after January 1, 2024, will only have 30 days to file, unless that date is extended in accordance with the Notice of Proposed Rule Making discussed below. FinCEN also published a FAQ to assist reporting companies in meeting their compliance obligations. At the end of September, FinCEN issued a Notice of Proposed Rule Making to extend the filing deadline of certain BOI reports for entities created or registered in the one-year period beginning on January 1, 2024 from 30 to 90 days. Comments will be accepted by FinCEN only through October 30, 2023. Persons who expect to create or register new companies in the coming year may have views on extended the filing deadline to 90 days. We welcome any questions you may have with regard to the CTA, Beneficial Ownership Information reporting requirements, AML, FinCEN or other reporting obligations. In addition, if you would like assistance submitting comments to FinCEN, please contact us. David B. Chenkin Kenneth C. Rudd Aixa Maldanado-Quinones Robert W. Ray Theodora D. Vasilatos AJ Bosco Kenneth C. Rudd is an accomplished AML attorney and commercial litigator. He routinely represents large and small financial institutions with regard to AML compliance and in connection with responding to criminal and civil process, particularly in the AML space. He frequently collaborates with other outside counsel in various matters to ensure that clients’ AML issues are well handled commensurate with risk. For questions about this article, please contact krudd@zeklaw.com.
FinCEN Publishes Guidance About Beneficial Ownership Reporting and Requests Comment on Extending Deadlines By Kenneth C. Rudd | October 6, 2023 Recently, the Financial Crimes Enforcement Network (“FinCEN”) has taken important steps that affect small business and their reporting obligations with regard to their beneficial ownership under the Corporate Transparency Act (“CTA”). In sum, the CTA requires both domestic and foreign corporations, LLCs and other entities created by filing a document with the secretary of state or similar office, unless exempt (and exemptions are broad, particularly for larger companies), to report to FinCEN the individuals who directly or indirectly exercise substantial control or own or control 25% or more of the company. The intent of this reporting is, in sum, to assist the Government in combatting money laundering and the financing of terrorism. The regulation implementing the beneficial ownership reporting requirements of the CTA, 31 C.F.R. §1010.380, becomes effective January 1, 2024. In September 2023, FinCEN published its Small Entity Compliance Guide concerning Beneficial Ownership Information (“BOI”). The Guide is intended to help businesses determine if they are subject to the reporting requirements of the CTA and comply. Beginning January 1, 2024, companies that are subject to the reporting requirements will be required to submit reports to FinCEN concerning their beneficial ownership. Reporting companies created or registered before January 1, 2024 will have until January 1, 2025 to file their initial reports, but those created or registered on or after January 1, 2024, will only have 30 days to file, unless that date is extended in accordance with the Notice of Proposed Rule Making discussed below. FinCEN also published a FAQ to assist reporting companies in meeting their compliance obligations. At the end of September, FinCEN issued a Notice of Proposed Rule Making to extend the filing deadline of certain BOI reports for entities created or registered in the one-year period beginning on January 1, 2024 from 30 to 90 days. Comments will be accepted by FinCEN only through October 30, 2023. Persons who expect to create or register new companies in the coming year may have views on extended the filing deadline to 90 days. We welcome any questions you may have with regard to the CTA, Beneficial Ownership Information reporting requirements, AML, FinCEN or other reporting obligations. In addition, if you would like assistance submitting comments to FinCEN, please contact us. David B. Chenkin Kenneth C. Rudd Aixa Maldanado-Quinones Robert W. Ray Theodora D. Vasilatos AJ Bosco Kenneth C. Rudd is an accomplished AML attorney and commercial litigator. He routinely represents large and small financial institutions with regard to AML compliance and in connection with responding to criminal and civil process, particularly in the AML space. He frequently collaborates with other outside counsel in various matters to ensure that clients’ AML issues are well handled commensurate with risk. For questions about this article, please contact krudd@zeklaw.com.