Federal Legislation Calling on Treasury's Financial Crimes Enforcement Network (FinCEN) to Collect Beneficial Ownership Information
- On January 1, 2021, the FY 2021 National Defense Authorization Act became Public Law 116-283. The law requires certain corporations and LLCs to report beneficial ownership information to the U.S. Department of the Treasury. Treasury has one year to develop regulations to implement the requirements.
- In April 2021, FinCEN published an Advanced Notice for Proposed Rulemaking to collect comments on developing proposed rules for filing beneficial ownership information. The filing deadline for comments was May 6, 2021.
As the officials who oversee the 50-state incorporation process in the U.S., Secretaries of State are dedicated to assisting federal law enforcement in cracking down against criminals who attempt to hide behind front companies and shell entities. Since 2010, NASS has promoted measures to help federal law enforcement gain access to company ownership information disclosed through federal tax filings and financial disclosure reports. Calls for state-based collection of this information was something NASS members rejected because alternative, more efficient collection methods already existed. Those methods included: Internal Revenue Service (IRS) Revised Form SS-4, U.S. Treasury Department Final Rule to Treat Certain Domestic Entities Disregarded as Separate from Their Owners as Corporations, U.S. Treasury Department Report of Foreign Bank and Financial Accounts (FBAR) Reports, and U.S. Treasury Department Customer Due Diligence (CDD) requirements. These federal tax filings and financial disclosure reports continue to provide additional information on a business entity’s ownership and control.
State business entity formation processes are ministerial in nature. Additionally, entity information filed with the state business registry is public information.