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  • Elizabeth A. McMorrow

FinCEN Issued Final CTA Identifiers Rule

On November 7, 2023, the Financial Crimes Enforcement Network (FinCEN) issued a final rule specifying the circumstances under which an entity classified as a Reporting Company under the U.S. Corporate Transparency Act (CTA) may report an entity’s FinCEN identifier to report the BOI of certain related entities.

What Is CTA?

The CTA requires certain domestic and foreign entities to report on their beneficial ownership information (BOI). Congress assigned the administration and enforcement of the CTA to FinCEN. FinCEN’s CTA regulations are effective from January 1, 2024.

What Is A FinCEN Identifier?

A FinCEN identifier is a unique identifying number that FinCEN will issue to individuals who have provided FinCEN with their BOI and to reporting companies that have filed initial BOI reports. It is not possible to obtain a FinCEN Identifier until January 1, 2024.

What Does The New Rule Say?

The final rule issued on November 7, 2023 amends FinCEN’s previously issued final Beneficial Ownership Information (BOI) Reporting Rule. The goal of the amendment was to address concerns that the use of entity FinCEN identifiers could obscure the identities of BOs resulting in greater secrecy or incomplete or misleading disclosures. The final rule provides criteria that must be met in order for a Reporting Company to be permitted to use a FinCEN identifier to report the BOI of certain related entities.

The final rule states:

A reporting company may report another entity’s FinCEN identifier and full legal name in lieu of the information required under paragraph (b)(1)(ii) of this section with respect to the beneficial owners of the reporting company only if:

(1) The other entity has obtained a FinCEN identifier and provided that FinCEN identifier to the reporting company;

(2) An individual is or may be a beneficial owner of the reporting company by virtue of an interest in the reporting company that the individual holds through an ownership interest in the other entity; and

(3) The beneficial owners of the other entity and of the reporting company are the same individuals.

Requests for Postponement & Awaiting Rules

We are still waiting for FinCEN to finalize registration forms, rules regarding portal access, and the portal itself. FinCEN will also revise the existing Customer Due Diligence (CDD) Rule. However, FinCEN has until January 1, 2025 to implement the CDD revision.

In the meantime, some industry groups have submitted letters to FinCEN and/or Congress requesting CTA be postponed for one year to ensure all impacted companies are aware of their CTA obligations.

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