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ABA calls on FinCEN to make changes to proposed beneficial ownership rule

By Mark Ford on March 22, 2023

The American Bankers Association (ABA) is urging the Financial Crimes Enforcement Network (FinCEN) to make changes to the form that entities will use to report beneficial ownership information to the registry that FinCEN is creating to store this information.

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 FinCEN according to the Thomson Reuters Institute and Thomson Reuters Regulatory Intelligence (Trade-based Financial Crime, 30 January 2023).

Background

The Corporate Transparency Act, part of the Anti-Money Laundering Act of 2020, required FinCEN to create a registry of the beneficial owners of legal entities formed or registered in the US while minimising the compliance burden on the regulated community. The agency established the registry last year.

ABA’s letter was sent in response to FinCEN’s request for approval by the Office of Management and Budget of the registry’s reporting form, which FinCEN is required to obtain.

Critical responses

In the letter, ABA urged FinCEN not to allow a filer to list “Unknown,” “Unable to identify all Company Applicants,” and “Unable to identify all Beneficial Owners” as responses to key demographic information sought about company applicants and the company’s beneficial owners.

The association also asked FinCEN to revise its estimate of burden to regulated entities in its Paperwork Reduction Act request to include the effect of FinCEN’s reporting requirement on financial institutions.

Last month, ABA urged FinCEN to withdraw its related proposal regarding access to the registry, calling the proposal “fatally flawed.”

The ABA Comment Letter on FinCEN Reporting Rule Paperwork Reduction Act Request, can be found here.