Last year, the US Congress passed the first federal statute requiring applicable businesses to report the full names, birth dates, current addresses, and an identifying number from an acceptable document, of individuals – known as “beneficial owners” – who exercise substantial control over a company or hold at least 25% of its ownership interests. Personal information about the individuals who are their company applicants is required as well. The law is considered an important step in efforts to combat illegal activities such as money laundering or terrorist financing. But, according to a new installment of Wolters Kluwer CT Corporation’s recently launched CT Expert Insights Podcast, there remain some unanswered questions for organizations looking to comply.
In this episode Sandra Feldman, Publications Attorney at CT Corporation, discusses the Notice of Proposed Rulemaking that was issued in December 2021 by the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), which implements the beneficial ownership reporting provisions found in the Corporate Transparency Act. While the reporting requirement has not yet been formally locked into place and changes may still occur, Feldman suggests that more definitive action is imminent.
“Members of Congress have said that they want to get the reporting requirement finalized sooner rather than later, and the White House has said that combatting money laundering is a priority,” she notes.
Fortunately, there are steps that a domestic or foreign reporting company – a corporation, limited liability company or other entity that is created by the filing of a document with a Secretary of State or similar office under the law of a state or Indian tribe (or in the case of a foreign reporting company, created under the laws of a foreign country and registered to do business in a state or tribal jurisdiction) – can and should begin taking now in order to comply. This includes developing an internal system to help track the categories of information that will eventually need to be provided to FinCEN, making both the initial filing as well as any further updates required much easier.
Feldman stresses that the proposed rule still leaves some issues unresolved. For example, FinCEN has yet to announce a proper format or mechanism for filing documents with the agency. However, CT Corporation has been tracking the development of the Corporate Transparency Act since it was passed in January 2021 and will continue to provide additional guidance as progress develops.
“Stay tuned, because we’ll probably have some more information to share with you before reporting actually gets underway,” Feldman says.
For nearly 130 years, Wolters Kluwer CT Corporation has been the leading provider of registered agent services, incorporation services, and legal entity compliance. It is part of Wolters Kluwer’s Governance, Risk & Compliance (GRC) division and has a global reach into over 150 countries. More than 75 percent of Fortune 500 companies, 95 percent of AmLaw 100 law firms, and 350,000 small businesses trust CT Corporation to handle their compliance needs. The other legal services business of Wolters Kluwer GRC is Wolters Kluwer ELM Solutions – a global provider of enterprise legal spend and matter management, contract lifecycle management and legal analytics solutions.
About Wolters Kluwer Governance, Risk & Compliance
Governance, Risk & Compliance is a division of Wolters Kluwer, which provides legal and banking professionals with solutions to help ensure compliance with ever-changing regulatory and legal obligations, manage risk, increase efficiency, and produce better business outcomes. GRC offers a portfolio of technology-enabled expert services and solutions focused on legal entity compliance, legal operations management, banking product compliance, and banking regulatory compliance.
Wolters Kluwer (AEX: WKL) is a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. Wolters Kluwer reported 2020 annual revenues of €4.6 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,200 people worldwide.
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