Come On Now... Tell the Truth - WST

Remember that game show “To Tell the Truth”? Three contestants all claim to be the same person – one is telling the truth but the other two are imposters? Then a panel had to guess who was really telling the truth. Well for years, that’s how many in the BSA compliance world have felt about identifying the true owners of some business entities. Shell or layered companies existed, which prevented financial institutions from accurately identifying the true owners of many business entities. While beneficial ownership rules put into place in 2018 helped somewhat with the unmasking of entity ownership, the Corporate Transparency Act passed in 2021 has taken that one step further. Since the Act’s passage, the Financial Crimes Enforcement Network (FinCEN) has been working to roll out new regulations to implement the requirements of the Act.

On March 24, FinCEN published the initial guidance materials to aid the public, especially the small business community, to assist with new beneficial ownership information (BOI) reporting requirements which take effect on January 1, 2024. The new regulations require certain businesses entities registered and doing business within the United States to report identifying information on the individuals who directly or indirectly own or control the business. Although the new regulations do allow for some business entities to be exempted, most small business enterprises will be directly impacted.

How does this all impact your institution? Well to begin with, you will probably need to educate your commercial clients about these upcoming changes. The guidance published by FinCEN might be something your institution will want to include on your own website or disseminate to your commercial clients in some other manner. Secondly, we can only hope that financial institutions might see some relief in the burden of collecting beneficial ownership information – of course, that remains to be seen.

For more information on the beneficial ownership requirements which become effective January 1, 2024, see the links below:

FinCEN press release: https://www.fincen.gov/news/news-releases/fincen-issues-initial-beneficial-ownership-information-reporting-guidance

Frequently asked questions regarding BOI: https://www.fincen.gov/boi-faqs

Key filing dates for BOI:
https://www.fincen.gov/sites/default/files/shared/BOI_Reporting_Filing_Dates-Published03.24.23_508C.pdf

Key questions regarding BOI:
https://www.fincen.gov/sites/default/files/shared/BOI_Reporting_Key_Questions_Published_508C.pdf

BOI reporting introductory video: https://www.youtube.com/watch?v=nx48tPUbRK0

BOI informational video which is more in depth than the above video:
https://www.youtube.com/watch?v=qP5V9k3ypl0

Authored by: Joann Lang, CIA, CAMS and Josh Mourning, CCPB