By Martha Waggoner
The Financial Crimes Enforcement Network (FinCEN) on Thursday, Dec. 21, 2023, issued a final rule regarding access to beneficial ownership information (BOI) that will be reported to FinCEN under Section 6403 of the Corporate Transparency Act (CTA) (RIN 1506-AB59).
The preamble to the final rule says it "implement[s] the strict protocols required by the CTA to protect sensitive personally identifiable information (PII) reported to FinCEN and establish the circumstances in which specified recipients have access to BOI, along with data protection protocols and oversight mechanisms applicable to each recipient category."
Starting Jan. 1, 2024, most companies created in or registered to do business in the United States must report information about their beneficial owners to FinCEN as part of an anti-money laundering initiative. Information collected by FinCEN from the BOI reports will be kept in a nonpublic database called the Beneficial Ownership Secure System.
In comments on YouTube, FinCEN Director Andrea Gacki described the key differences between the final rule and the proposed rule, issued in December 2022. All changes were made in response to comments from various stakeholders, she said.
The key changes involve the scope of financial institution access to BOI; limitations on offshore access to BOI; and streamlining procedures for state, local, and tribal law enforcement to gain access to BOI, Gacki said.
"The access rule prescribes the circumstances under which beneficial ownership information reported to FinCEN may be disclosed to authorized recipients and how it must be protected," she said. "The access rule reflects FinCEN's commitment to creating a highly useful database for authorized BOI recipients while protecting this sensitive information from unauthorized disclosure."
According to Gacki, the final rule does not affect existing requirements for financial institutions to collect BOI from their customers under FinCEN's 2016 customer due diligence rule. FinCEN will issue two interagency statements to provide clarity for financial institutions on the interplay between the access rule and the customer due diligence rule, she said.
The next step is for FinCEN to revise its customer due diligence rule consistent with the requirements of the CTA, she said, as the access rule does not change that rule.
Guidance and educational materials can be found at FinCEN's BOI webpage. Businesses with questions about the upcoming reporting requirements may contact FinCEN online.
Advocacy
On Dec. 12, the U.S. House of Representatives passed H.R. 5119, the Protect Small Business and Prevent Illicit Financial Activity Act, which would delay the effective date of BOI reporting by one year. The AICPA is advocating for the U.S. Senate to approve the same delay "due to the lack of timely guidance" from FinCEN and a lack of awareness of the new rule on the part of many small businesses. The Senate must take up the bill by Dec. 31, and the AICPA is asking CPAs and other tax professionals to write their senators.
Also, the AICPA submitted comments to FinCEN in February 2022, urging it to consider the burden and cost imposed by BOI reporting requirements affecting an estimated 25 million small businesses, including small CPA firms.