Impact on financial institutions of upcoming US beneficial ownership rule examined in new paper

Financial institutions have so far not been provided the relief from the burdens of onboarding and customer due diligence they had hoped for as a result of the final version of the beneficial ownership rule issued in September by the US treasury department’s Financial Crimes Enforcement Network (FinCEN) according to a new white paper.

Published by the Thomson Reuters Institute and Thomson Reuters Regulatory Intelligence, the paper, The Beneficial Ownership Rule: A shift in policy, looks at the history, implementation and potential impact of the new rule.

No relief yet

Financial institutions initially hoped that the new registry might relieve them of their obligation to collect so much data when they bring on new clients, or otherwise ease their customer due diligence burden.

While there is more to come regarding the beneficial ownership rule, thus far the situation has not yet provided the relief that financial institutions hoped for, according to the paper.

It looks into the coming beneficial ownership regulations and how they will impact the ways in which financial institutions collect and manage customer information

An emerging picture

Over the course of 2023, it will be incumbent upon banks, financial institutions, and other entities to understand the obligations created by regulators as they implement the beneficial ownership rule, which was designed to rein in the use of shell companies to mask illicit transactions.

Following the issuance of the final version of the rule in September, the treasury said late last year that it is seeking comments on a notice of proposed rulemaking (NPRM) published on 15 December 2022.

Clarification expected

It would implement provisions of the Corporate Transparency Act that govern the access to and protection of beneficial ownership information (Trade-based Financial Crime, 4 January 2022). Comments on the proposed access rule are due by February 13, 2023.

As 2023 progresses and there is further clarification, it is possible that the anticipated relief will come to light and the compliance burden will shift away from financial institutions, the paper concludes.

The white paper, The Beneficial Ownership Rule: A shift in policy, can be requested from here.

Categories: Trade Based Financial crimes News

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