In December 2021, the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) proposed legislation to safeguard the financial system from illicit uses, combat money laundering and related crimes, including terrorism, and promote national security through the strategic use of financial authorities and the collection, analysis and dissemination of financial information. Under the Corporate Transparency Act (CTA), reporting companies will be required to report to FinCEN certain identifying information regarding the company and its "beneficial owners" and "corporate applicants".
Currently, companies are not required to report this information to federal or state government authorities.
The proposed rule significantly expands the type of entities subject to the beneficial ownership reporting requirements and the scope of individuals who constitute the beneficial owners to be reported.
The proposed rule contains a number of broad and potentially subjective terms that may create confusion for some reporting companies when it comes time to comply with the reporting requirements.