You may have seen that the Financial Crimes Enforcement Network (FinCEN) issued a Final Rule related to Beneficial Owner requirements.
This rulemaking is part of a series of mandates that came with The Anti-Money Laundering Act of 2020 (AMLA 2020).
This Final Rule requires certain legal entities to report beneficial ownership information to FinCEN. Although the Final Rule will take effect on January 1, 2024, there is a one-year grace period for covered entities that were created or registered prior to that date.
So, how does this impact the Beneficial Ownership requirements that are part of your Customer Due Diligence (CDD) program? It really doesn’t. Yet.
This Rule is directed at the legal entities themselves. That being said, the AMLA 2020 also requires updates to existing Beneficial Ownership rules (for financial institutions) in light of these changes. While it is unclear at this point what those updates will be, there will be changes coming. Your management team should be made aware of these upcoming changes, and it may be good to let your frontline personnel know that they could be getting questions about these new requirements as well.
It’s interesting to note the Final Rule provides for centralized tracking of the beneficial owners of legal entities; however, many of the definitions included are different from the CDD rules we currently operate under. For instance, there is an exemption under this new rule for “large operating companies” that employ more than 20 full-time employees in the United States (U.S.), have a physical operating presence in the U.S.; and have filed a federal income tax return for the previous year demonstrating more than $5,000,000 in gross receipts or sales. There are several other differences as well, which likely means there will be some significant changes coming. But, as previously noted, there are no changes to the BSA/AML beneficial ownership requirements at this time.
We will be discussing this at our upcoming BSA/AML Virtual Conference and will keep you posted on any additional developments!
Published
2022/10/12
