Legislators Urge FinCEN to Remove "Escape Hatch" from Proposed Beneficial Ownership Reporting
A bipartisan group of Senators and Representatives urged FinCEN to amend the proposed reporting form that will be used to collect beneficial ownership information ("BOI") to adhere to congressional intent and ensure transparency. The letter was signed by committee leaders from the House Financial Services Committee, Senate Banking Committee, and several other committee chairs and ranking members.
FinCEN had recently adopted new rules implementing the BOI reporting provisions of the Corporate Transparency Act ("CTA"). The new rules will require many corporations, limited liability companies, and other entities created or registered to do business in the United States to identify (i) the beneficial owners of the reporting company and (ii) each "company applicant" of the reporting company.
In their letter to Treasury Secretary Janet L. Yellen and FinCEN Acting Director Himamauli Das, the legislators said that the proposed BOI reporting form includes an "escape hatch" by allowing reporting companies to list "Unable to identify...unable to obtain" or "Unknown...not able to obtain" responses. The legislators stated that such responses will (i) allow bad actors to conceal the identity of the company applicant or beneficial owner and (ii) impede customer due diligence and information available to law enforcement. The lawmakers added that the reporting form as currently proposed undermines the bipartisan reporting goals established by the CTA and they called on FinCEN to "follow through on recent reports" and amend the proposed reporting form that will be used to collect BOI.