In a concerted effort to bolster the arsenal against financial crimes, the Treasury’s Financial Crimes Enforcement Network (FinCEN) has unveiled a comprehensive guide outlining rules governing access to Beneficial Ownership Information (BOI), focusing on empowering small businesses. Released through a Small Entity Compliance Guide, these regulations cater to institutions falling under specific categories as defined by 31 CFR Section 1010.100(t) and mandated by obligations outlined in the current customer due diligence rule, according to a recent announcement by FinCEN.
With a phased approach towards providing access to BOI, FinCEN clarified that financial institutions, including small businesses, are yet to obtain such access, with some slated to be included in the final cohort. Crucially, the guide underscores that financial entities must procure the customer’s consent before requesting their BOI from FinCEN. Notably, this consent is a one-time requirement, enabling institutions to access BOI even across multiple accounts affiliated with the same reporting company. Moreover, FinCEN emphasizes that written consent is not obligatory, affording flexibility in the consent procurement process, which is particularly beneficial for small businesses.
Financial institutions, including small businesses, are empowered to establish protocols for acquiring and documenting consent and delineating procedures for revocation or expiration. The guide stipulates that consent documentation must be retained for five years after its utilization for making a BOI request to FinCEN.
The security and confidentiality requirements section encapsulates the rules regarding customer consent, ensuring that small businesses can navigate regulatory complexities effectively. Additionally, the guide comprehensively addresses the authorized use of BOI, administration of requests, and the ramifications of violations, offering valuable insights tailored to the needs and capabilities of small businesses.
This development aligns with the broader regulatory landscape instigated by the Corporate Transparency Act, P.L. 116-283, enacted in 2021. Effective January 1st, most companies established in or registered to operate within the United States must furnish information regarding their beneficial owners to FinCEN as part of an overarching anti-money laundering initiative. FinCEN officials estimate that approximately 32.6 million companies fall under the ambit of this requirement, including a substantial portion of small businesses, with an anticipated annual filing of around 5 million initial reports.
The issuance of final BOI access rules in December 2023 underscores the culmination of extensive deliberations and regulatory refinements to bolster the efficacy of anti-money laundering measures. With the unveiling of this guide, FinCEN endeavors to equip financial institutions and tiny businesses with the requisite guidance and protocols to navigate the evolving regulatory landscape and effectively enhance their capabilities in combating economic crimes.
Source ( Journal of Accountancy News).
