In response to criticism from the banking industry and Congress itself, U.S. Treasury officials have promised to amend their proposed form of BOI Report with an improved template.
FinCEN’s BOI Report
FinCEN’s proposed form of BOI Report had included an option that would have allowed a reporting company to state that certain data points were “unknown.” Critics had charged that such an approach would have effectively made “reporting optional under the CTA, gutting one of the most transformative pieces of anti-money laundering legislation in decades.”
A key aspect of the Corporate Transparency Act is that FinCEN was supposed to have collected the BOI information in a way that would render it useful for law enforcement to identify the true owners of corporate entities. FinCEN’s form of BOI Report, critics charged, would have allowed reporting companies to simply shrug their shoulders and say that required information was “unknown” or that the reporting company was “unable to obtain” it.
Criticism of the Form of BOI Report
FinCEN’s approach touched a nerve with Congress. On April 3, a group of twelve lawmakers from both houses of Congress and both political parties wrote a stunning letter to U.S. Treasury Secretary Yellen and Acting Director of FinCEN Him Das. The authors included Democratic Senators Sheldon Whitehouse, Ron Wyden and Elizabeth Warren along with Republican Congressman Patrick Henry.
The lawmakers wrote that, “The agency made the conscious decision to craft the Notice with an “escape hatch.” Specifically, allowing “Unable to identify…unable to obtain” or “Unknown…not able to obtain” determinations undermine the effectiveness of the law.”
They argued that, “Allowing these options in any final rule will degrade the benefits of the registry to law enforcement and to financial institutions and provide an opportunity for bad actors to obscure the identity of the company applicant or beneficial owner. The result is that the registration form itself will undermine the underlying, bipartisan goals of the CTA.”
In response, Treasury Secretary Yellen stated at a White House event last week that “Treasury has a lot of work to do to realize this promise—including by advancing additional rulemakings that need to be calibrated carefully,” Ms. Yellen said. “The database must be highly useful to all of its stakeholders.”
Acting Director of FinCEN Das said more specifically “FinCEN is working to issue an updated beneficial ownership information reporting form as soon as possible.”
FinCEN’s BOI reporting rule takes effect on January 1, 2024, so FinCEN will need to accelerate its efforts in order to meet this deadline.
