The Financial Crimes Enforcement Network (FinCEN) of the Treasury Department issued a Notice of Proposed Rulemaking for the beneficial ownership information reporting provisions within the Corporate Transparency Act (CTA). The FinCEN also issued a related Press Release and Fact Sheet, both of which are dated 7 December 2021.
The proposed rule is designed to prevent bad actors from using otherwise legal entities, such as shell companies, to conceal the proceeds of their corrupt and criminal acts.
The proposed rule would delineate, among other things, who must report beneficial ownership information, what information they must provide, and when they must do so. For instance, reporting companies would be required to identify the following two categories of individuals:
- the beneficial owners of the entity, including any individuals who:
- exercise substantial control over a reporting company; or
- own or control at least 25% of the ownership interests of a reporting company; and
- individuals who have filed an application to form the company in the United States or register it to do business in the United States.
The CTA forms a part of the Anti-Money Laundering Act of 2020 and lays out beneficial ownership information reporting requirements for business entities created in or registered to do business in the United States.