FinCEN Trio of CTA (BO) Updates
The U.S. Financial Crimes Enforcement Network (FinCEN) issued three notices this week regarding the U.S. Corporate Transparency Act (CTA). The deadline for public comment on each of these notices is October 30, 2023. Spoiler alert: the effective date of the CTA is still January 1, 2024.
What Is FinCEN?
The U.S. Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury. FinCEN’s goal is to safeguard the financial system from illicit use and combat money laundering and promote national security.
What Is CTA?
In short, the CTA establishes a beneficial ownership registry for tens of millions of U.S. and foreign entities. The goal of the registry is to assist law enforcement including tax authorities in unmasking shell companies used to hide illicit activities.
CTA Deadline Extension Notice
The effective date of CTA is January 1, 2024. This week FinCEN announced its proposal to extend the reporting deadline for certain filers of Beneficial Ownership Information Reports (BOIRs). If an entity required to register in the FinCEN portal is created or registered to do business in the U.S. on or after January 1, 2024, and before January 1, 2025, then FinCEN proposed that the entity have 90 rather than 30 days to submit its BOIR to FinCEN.
FinCEN stated its aim to establish a contact center prior to January 1, 2024, to field questions about the BOI reporting requirements from reporting companies and other stakeholders.
FinCEN Identifier Application Notice
Individuals have the option of requesting a FinCEN Identifier by submitting an application through the FinCEN portal. The individual will be responsible for submitting e-updates to FinCEN and will provide requesting parties with the FinCEN Identifier rather than personally identifiable information. FinCEN updated its draft application for individuals based on previously received public comments and is accepting public comments on the revised application through October 30, 2023.
FinCEN estimates that 325,569 individuals will apply for a FinCEN identifier during 2024 and 49,985 individuals will apply for a FinCEN identifier annually thereafter.
Beneficial Ownership Information Report (BOIR) Mechanism
FinCEN previously received public comments regarding the BOIR and is considering revising its BOIR approach. FinCEN anticipates using one approach starting January 1, 2024, and then a potential alternative approach at a later date. The initial approach will require every field in the application to be completed in order for the system to accept the BOIR Form. While this approach is in effect, FinCEN will seek continual feedback from filers and database users to determine potential improvements.
The alternative implementation would have the same response fields requiring the same information to be accurately reported. However, this alternative implementation would provide a mechanism for filers to temporarily indicate if they are unable to provide certain information for defined reasons. Specifically, there would be a drop-down option in the Beneficial Owner(s) section that would allow filers to specify a reason why they are temporarily unable to provide a piece of information. For example, FinCEN is considering several drop-down options, including (but not limited to): “Cannot Contact BO”; “BO Unresponsive”; “BO Refused to Provide”; and “Third Party Refused to Provide.”
Forms whose filers select a drop-down option will be accepted into the portal but will be considered incomplete and non-compliant filings until such time as the missing information is added.
Links to FinCEN Notices