On December 8, 2021, a proposal was published to the Federal Register concerning the implementation of beneficial ownership information reporting provisions, Section 6403, under the Corporate Transparency Act (CTA). Anyone who has been involved in the account opening process over the past few years has probably heard their fill concerning Beneficial Ownership. This proposed rulemaking may be a sign of good news to come. The proposed rulemaking calls for the beneficial ownership information to be submitted at the time the entity is created by the “company applicant”, or the individual filing for the creation of the entity. It also calls for a centralized database to be created in order to house this information. These proposed actions could lead to the burden of obtaining beneficial ownership information at account opening being removed from the financial institution.
Before we celebrate, we also need to understand that FinCEN is responsible for maintaining the information obtained via section 6403, and under 6403, financial institutions are required to assist FinCEN in meeting their customer due diligence requirements. Thankfully, FinCEN is also required to revise its current CDD requirements which include the beneficial ownership rule. This will be done in three sets of rulemaking. The first will cover beneficial ownership reporting requirements, the second will cover access protocols and disclosure for beneficial ownership information maintained, and the last will be the steps taken to revise the existing CDD rule.
As things currently stand, there will be no changes related to the CDD Rule, processes involved, and how it affects community banking, but there are possible changes on the horizon that you should be aware of. Additional information can be found at the link below.
Beneficial Ownership Information Reporting Notice of Proposed Rulemaking