Beneficial Ownership Information Reporting Requirements, 17557-17565 [2021-06922]

Agencies

• DEPARTMENT OF THE TREASURY
• Financial Crimes Enforcement Network

[Federal Register Volume 86, Number 63 (Monday, April 5, 2021)]
[Proposed Rules]
[Pages 17557-17565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06922]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 1010

RIN 1506-AB49


Beneficial Ownership Information Reporting Requirements

AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.

ACTION: Advance notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: FinCEN is issuing this advance notice of proposed rulemaking 
(ANPRM) to solicit public comment on questions pertinent to the 
implementation of the Corporate Transparency Act (CTA), enacted into 
law as part of the National Defense Authorization Act for Fiscal Year 
2021 (NDAA). This ANPRM seeks initial public input on procedures and 
standards for reporting companies to submit information to FinCEN about 
their beneficial owners (the individual natural persons who ultimately 
own or control the reporting companies) as required by the CTA. This 
ANPRM also seeks initial public input on FinCEN's implementation of the 
related provisions of the CTA that govern FinCEN's maintenance and 
disclosure of beneficial ownership information subject to appropriate 
protocols.

DATES: Written comments on this ANPRM must be received on or before May 
5, 2021.

ADDRESSES: Comments may be submitted by any of the following methods:
     Federal E-rulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. Refer to Docket Number 
FINCEN-2021-0005 and RIN 1506-AB49.
     Mail: Policy Division, Financial Crimes Enforcement 
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2021-0005 and RIN 1506-AB49.

FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Support Section 
at 1-800-767-2825 or electronically at [email protected].

SUPPLEMENTARY INFORMATION:

I. Scope of ANPRM

    This ANPRM seeks comment on FinCEN's implementation of certain 
provisions in Section 6403 of the CTA.\1\

[[Page 17558]]

Section 6403 requires reporting companies (corporations, limited 
liability companies (LLCs), and similar entities, subject to certain 
statutory exemptions) to submit to FinCEN specified information on 
their beneficial owners--the individual natural persons who own or 
control them--as well as specified information about the persons who 
form or register those reporting companies. Section 6403 further 
requires FinCEN to maintain this information in a confidential, secure, 
and non-public database, and it authorizes FinCEN to disclose the 
information to certain government agencies for certain purposes 
specified in the CTA, and to financial institutions to assist in 
meeting their customer due diligence obligations. In both cases, these 
disclosures are subject to appropriate protocols to protect 
confidentiality. This ANPRM seeks comment on numerous questions as 
FinCEN begins to develop proposed regulations implementing these 
provisions. While only the regulations implementing the reporting 
requirements must be promulgated by January 1, 2022, with an effective 
date to be determined, FinCEN also seeks comment at this time on its 
implementation of the related database maintenance use and disclosure 
provisions. Section 6403's mandate that the final rule on customer due 
diligence requirements for financial institutions be revised will be 
the subject of a separate rulemaking, about which the public will 
receive notice and opportunity to comment.
---------------------------------------------------------------------------

    \1\ The CTA is Title LXIV of the National Defense Authorization 
Act for Fiscal Year 2021, Public Law 116-283 (January 1, 2021). 
Section 6403 of the CTA, among other things, amends the Bank Secrecy 
Act by adding a new Section 5336, Beneficial Ownership Information 
Reporting Requirements, to Subchapter II of Chapter 53 of Title 31, 
United States Code. To the greatest extent possible, this ANPRM will 
cite to new 31 U.S.C. 5336.
---------------------------------------------------------------------------

II. Background

A. The Bank Secrecy Act

    Enacted in 1970 and amended most recently by the Anti-Money 
Laundering Act of 2020, which includes the CTA, the Bank Secrecy Act 
(BSA) aids in the prevention of money laundering, terrorism financing, 
and other illicit activity.\2\ The purposes of the BSA include, among 
other things, ``requir[ing] certain reports or records that are highly 
useful in--(A) criminal, tax, or regulatory investigations, risk 
assessments, or proceedings; or (B) intelligence or counterintelligence 
activities, including analysis, to protect against terrorism'' and 
``establish[ing] appropriate frameworks for information sharing'' among 
financial institutions and government authorities.\3\
---------------------------------------------------------------------------

    \2\ Section 6003(1) of the Anti-Money Laundering Act of 2020, 
Division F of the National Defense Authorization Act for Fiscal Year 
2021, Public Law 116-283 (January 1, 2021), which includes the CTA, 
defines the Bank Secrecy Act as comprising Section 21 of the Federal 
Deposit Insurance Act (12 U.S.C. 1829b), Chapter 2 of Title I of 
Public Law 91-508 (12 U.S.C. 1951 et seq.), and Subchapter II of 
Chapter 53 of Title 31, United States Code.
    \3\ 31 U.S.C. 5311(1), (5).
---------------------------------------------------------------------------

    Congress has authorized the Secretary of the Treasury (the 
Secretary) to administer the BSA. The Secretary has delegated to the 
Director of FinCEN the authority to implement, administer, and enforce 
compliance with the BSA and associated regulations.\4\ FinCEN is 
authorized to require financial institutions or nonfinancial trades or 
businesses to maintain procedures to ensure compliance with the BSA and 
the regulations promulgated thereunder and to guard against money 
laundering, the financing of terrorism, and other forms of illicit 
finance.\5\
---------------------------------------------------------------------------

    \4\ Treasury Order 180-01 (Jan. 14, 2020).
    \5\ 31 U.S.C. 5318(a)(2).
---------------------------------------------------------------------------

B. Beneficial Ownership of Legal Entities

    Legal entities such as corporations and LLCs play an important role 
in the U.S. economy. By limiting individual liability, corporations and 
LLCs allow owners to manage the risks associated with participating in 
business ventures. They also facilitate the formation of capital, 
making it easier to finance large business projects and structure the 
relationships among individuals engaged in an enterprise. They often 
can be formed with relatively few formalities and abbreviated (if any) 
regulatory review and approval, and their availability can be viewed as 
a stimulus to investment, entrepreneurship, and economic activity.
    At the same time, legal entities can be misused to conceal and 
facilitate illicit activity. As Congress recognized in the CTA, 
``malign actors seek to conceal their ownership of corporations, 
limited liability companies, or other similar entities in the United 
States to facilitate illicit activity, including money laundering, the 
financing of terrorism, proliferation financing, serious tax fraud, 
human and drug trafficking, counterfeiting, piracy, securities fraud, 
financial fraud, and acts of foreign corruption[.]'' \6\ Furthermore, 
Congress underscored that ``money launderers and others involved in 
commercial activity intentionally conduct transactions through 
corporate structures in order to evade detection, and may layer such 
structures . . . across various secretive jurisdictions such that each 
time an investigator obtains ownership records for a domestic or 
foreign entity, the newly identified entity is yet another corporate 
entity, necessitating a repeat of the same process.'' \7\ The ability 
to engage in activity and obtain financial services in the name of a 
legal entity without disclosing the identities of the natural persons 
who own or control the entity--the natural persons whose interests the 
legal entity most directly serves--enables those natural persons to 
conceal their interests. As FinCEN has previously highlighted, such 
concealment ``facilitates crime, threatens national security, and 
jeopardizes the integrity of the financial system.'' \8\
---------------------------------------------------------------------------

    \6\ CTA Section 6402(3).
    \7\ CTA Section 6402(4).
    \8\ Notice of Proposed Rulemaking: Customer Due Diligence 
Requirements for Financial Institutions, 79 FR 45151, 45153 (August 
4, 2014).
---------------------------------------------------------------------------

    U.S. government reports have consistently identified the ability to 
operate through legal entities without ready identification of their 
beneficial owners as a key illicit finance risk for the U.S. financial 
system. The 2018 National Money Laundering Risk Assessment noted that 
legal entities are misused by illicit actors to disguise criminal 
proceeds, and that the lack of readily available beneficial ownership 
information hampers law enforcement investigations, asset seizures and 
forfeitures, and international cooperation, as well as the ability of 
financial institutions to conduct customer due diligence (CDD) and 
identify suspicious activity.\9\ Further, the 2020 National Strategy to 
Combat Terrorist and Other Illicit Financing (2020 National Strategy) 
found that large-scale schemes that generate substantial proceeds for 
perpetrators and smaller white-collar cases alike routinely involve 
shell companies.\10\ As the Federal Bureau of Investigation (FBI) 
stated in recent Congressional testimony, the strategic use of shell 
companies ``makes investigations exponentially more difficult and 
laborious. The burden of uncovering true beneficial owners can often 
handicap or delay investigations, frequently requiring duplicative, 
slow-moving legal process in several jurisdictions to gain the 
necessary information.'' \11\ Moreover, as the 2020

[[Page 17559]]

National Strategy noted, ``while some federal law enforcement agencies 
may have the resources required to undertake complex (and costly) 
investigations [of this sort], the same is often not true for state, 
local, and tribal law enforcement.'' \12\ The burden imposed on 
investigations by the concealment of beneficial ownership information 
and the difficulty of obtaining accurate beneficial ownership 
information thus significantly hampers U.S. anti-money laundering (AML) 
and countering the financing of terrorism (CFT) efforts.
---------------------------------------------------------------------------

    \9\ U.S. Department of the Treasury, National Money Laundering 
Risk Assessment (2018) (2018 NMLRA), pp. 28-30, https://home.treasury.gov/system/files/136/2018NMLRA_12-18.pdf.
    \10\ U.S. Department of the Treasury, National Strategy for 
Combating Terrorist and Other Illicit Financing (2020) (2020 
National Strategy), p. 14, https://home.treasury.gov/system/files/136/National-Strategy-to-Counter-Illicit-Financev2.pdf.
    \11\ Testimony of Steven M. D'Antuono, Acting Deputy Assistant 
Director, Criminal Investigative Division, Federal Bureau of 
Investigation, before the Senate Banking, Housing, and Urban Affairs 
Committee, May 21, 2019.
    \12\ 2020 National Strategy, p. 14.
---------------------------------------------------------------------------

    The United States has taken steps to increase corporate 
transparency. For example, in October 2001, Congress began requiring 
U.S. financial institutions that maintain correspondent accounts for 
certain categories of foreign banks to obtain beneficial ownership 
information about those banks, including ``the identity of each of the 
owners of the foreign bank, and the nature and extent of the ownership 
interest of each such owner.'' \13\ In 2016, FinCEN promulgated the CDD 
Rule,\14\ which, among other things, requires banks, broker-dealers, 
mutual funds, futures commission merchants, and introducing brokers in 
commodities to collect beneficial ownership information at the time 
they open new accounts for legal entity customers, including 
corporations and LLCs.\15\
---------------------------------------------------------------------------

    \13\ 31 U.S.C. 5318(i)(2), added by Section 312(a) of the 
Uniting and Strengthening America by Providing Appropriate Tools 
Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 
2001 (Pub. L. 107-56).
    \14\ 81 FR 29398 (May 11, 2016).
    \15\ 31 CFR 1010.230.
---------------------------------------------------------------------------

    But these steps are only a partial solution.\16\ For example, U.S. 
legal entities could make payments through foreign accounts to acquire 
U.S.-based assets and then use those assets to engage in illicit 
activity without ever undergoing CDD. Further, U.S. legal entities 
without any U.S.-based accounts could be engaged in illicit activity 
outside the United States without having ever been subjected to CDD.
---------------------------------------------------------------------------

    \16\ See U.S. Money Laundering Threat Assessment Working Group, 
U.S. Money Laundering Threat Assessment, pp. 48-49 (2005), https://www.treasury.gov/resource-center/terrorist-illicit-finance/documents/mlta.pdf. See also Miller, Rena S. and Rosen, Liana W., 
Beneficial Ownership Transparency in Corporate Formation, Shell 
Companies, Real Estate, and Financial Transactions, Congressional 
Research Service (July 8, 2019), https://crsreports.congress.gov/product/pdf/R/R45798. In promulgating the CDD Rule, FinCEN noted 
that the beneficial ownership collection and verification 
requirements imposed on financial institutions at the account 
opening stage for legal entities was one part of a strategy that 
also involved the collection of beneficial ownership information at 
the time of incorporation. See 81 FR 29398, 29401 (``[C]larifying 
and strengthening CDD is an important component of Treasury's 
broader three-part strategy to enhance financial transparency of 
legal entities. Other key elements of this strategy include: (i) . . 
. the collection of beneficial ownership information at the time of 
the legal entity's formation and (ii) facilitating global 
implementation of international standards regarding CDD and 
beneficial ownership of legal entities'').
---------------------------------------------------------------------------

    Moreover, requiring financial institutions to obtain beneficial 
ownership information at the time of account opening, as the CDD Rule 
requires, does not make beneficial ownership information about U.S. 
legal entities available to law enforcement before an account is 
opened. Because states have different practices governing the formation 
of legal entities in the United States, the extent to which information 
about the beneficial owners of a U.S. legal entity may be otherwise 
available to law enforcement can vary widely from state to state.
    The U.S. government has long recognized that the difficulty of 
obtaining accurate, up-to-date beneficial ownership information 
constitutes a fundamental risk that due diligence by U.S. financial 
institutions cannot completely mitigate. Consequently, the U.S. 
government has identified this deficiency as the top priority for 
strengthening the U.S. AML/CFT regime, which, as Congress has noted, is 
essential to protect U.S. national security.\17\ The Financial Action 
Task Force (FATF), the intergovernmental organization that sets the 
international standards for combatting money laundering and the 
financing of terrorism and proliferation, of which the United States is 
a founding member, has set minimum standards for beneficial ownership 
transparency, against which over 200 jurisdictions are assessed. Many 
countries, including the United Kingdom and all member states of the 
European Union, have incorporated elements derived from these standards 
into their domestic legal and/or regulatory frameworks.\18\ The 2016 
FATF Mutual Evaluation Report of the United States underscored the 
seriousness of this deficiency as the lack of beneficial ownership 
transparency was one of the main reasons for the United States' failing 
grade regarding the effectiveness of the transparency of its beneficial 
ownership regime.\19\ FATF has also collaborated with the Egmont Group 
of Financial Intelligence Units on a study that identifies key 
techniques used to conceal beneficial ownership and identifies issues 
for consideration that include coordinated national action to limit the 
misuse of legal entities.\20\ Furthermore, the United States and other 
major economies have made commitments to enhance beneficial ownership 
transparency through the then-Group of Eight (G8) and Group of Twenty 
(G20).\21\ The CTA addresses that commitment.
---------------------------------------------------------------------------

    \17\ CTA Section 6402(5)(B). See 2020 National Strategy, p. 40; 
2018 NMLRA, pp. 28-30. See also Miller, Rena S. and Rosen, Liana W., 
Beneficial Ownership Transparency in Corporate Formation, Shell 
Companies, Real Estate, and Financial Transactions, Congressional 
Research Service (July 8, 2019), https://crsreports.congress.gov/product/pdf/R/R45798.
    \18\ The FATF is an international, inter-governmental task force 
whose purpose is the development and promotion of international 
standards and the effective implementation of legal, regulatory, and 
operational measures to combat money laundering, terrorist 
financing, the financing of proliferation, and other related threats 
to the integrity of the international financial system. Among other 
things, it has established standards on transparency and beneficial 
ownership of legal persons, so as to deter and prevent the misuse of 
corporate vehicles. The FATF Recommendations require countries to 
ensure that ``adequate, accurate, and timely information on the 
beneficial ownership and control'' of corporate vehicles is 
available and can be accessed by the competent authorities in a 
timely fashion. See FATF Recommendation 24, Transparency and 
Beneficial Ownership of Legal Persons, The FATF Recommendations: 
International Standards on Combating Money Laundering and the 
Financing of Terrorism and Proliferation (updated October, 2020), 
https://www.fatf-gafi.org/publications/fatfrecommendations/documents/fatf-recommendations.html; FATF Guidance, Transparency and 
Beneficial Ownership at par. 3 (October 2014), https://www.fatf-gafi.org/media/fatf/documents/reports/Guidance-transparency-beneficial-ownership.pdf.
    \19\ See FATF, Mutual Evaluation of the United States (2016), p. 
4 (key findings) and Ch. 7.
    \20\ FATF-Egmont Group, Concealment of Beneficial Ownership 
(2018), https://www.egmontgroup.org/sites/default/files/filedepot/Concealment_of_BO/FATF-Egmont-Concealment-beneficial-ownership.pdf.
    \21\ See, e.g., United States G-8 Action Plan for Transparency 
of Company Ownership and Control (June 2013), https://obamawhitehouse.archives.gov/the-press-office/2013/06/18/united-states-g-8-action-plan-transparency-company-ownership-and-control; 
G8 Lough Erne Declaration (July 2013), https://www.gov.uk/government/publications/g8-lough-erne-declaration; G20 High Level 
Principles on Beneficial Ownership (2014), https://www.g20.utoronto.ca/2014/g20_high-level_principles_beneficial_ownership_transparency.pdf; United 
States Action Plan to Implement the G-20 High Level Principles on 
Beneficial Ownership (Oct. 2015), https://obamawhitehouse.archives.gov/blog/2015/10/16/us-action-plan-implement-g-20-high-level-principles-beneficial-ownership.
---------------------------------------------------------------------------

C. The CTA

    The CTA, which Congress enacted on January 1, 2021, establishes a 
new framework for the reporting, maintenance, and disclosure of 
beneficial ownership information to:
     Set a clear federal standard for incorporation practices;
     Protect vital U.S. national security interests;

[[Page 17560]]

     Protect interstate and foreign commerce;
     Better enable critical national security, intelligence, 
and law enforcement efforts to counter money laundering, the financing 
of terrorism, and other illicit activity; and
     Bring the United States into compliance with international 
AML/CFT standards.\22\ Section 6403 of the CTA amends the BSA by adding 
a new section at 31 U.S.C. 5336 that requires the reporting of 
beneficial ownership information at the time of formation or 
registration, along with protections to ensure that the reported 
beneficial ownership information is maintained securely and accessed 
only by authorized persons for limited uses. The CTA requires the 
Secretary to promulgate implementing regulations that prescribe 
procedures and standards governing the reporting and use of such 
information, to include procedures governing the issuance of ``FinCEN 
identifiers'' for beneficial ownership information reporting.\23\ The 
CTA requires FinCEN to maintain beneficial ownership information in a 
secure, non-public database that is highly useful to national security, 
intelligence, and law enforcement agencies, as well as federal 
functional regulators.\24\
---------------------------------------------------------------------------

    \22\ CTA Section 6402(5).
    \23\ See 31 U.S.C. 5336(b)(5), added by CTA Section 6403(a). How 
FinCEN will issue these identifiers, whether individuals and legal 
entities will use (and will need to be issued) different types of 
identifiers, and whether other types of identifiers may be useable 
as FinCEN identifiers are among the issues about which the CTA is 
silent. This ANPRM accordingly includes some questions relating to 
the FinCEN identifier.
    \24\ CTA Section 6402(7)(A), (8)(C). The Federal functional 
regulators are the Board of Governors of the Federal Reserve System, 
the Federal Deposit Insurance Corporation, the National Credit Union 
Administration, the Office of the Comptroller of the Currency, and 
the Securities and Exchange Commission, and any other federal 
regulator that examines financial institutions for compliance with 
the BSA. CTA Section 6003(3) (citing 15 U.S.C. 6809).
---------------------------------------------------------------------------

    Through this ANPRM, FinCEN seeks input on how best to implement the 
reporting requirements of the CTA, as well as the CTA's provisions 
regarding FinCEN's maintenance and disclosure of reported information, 
from regulated parties; the governments of the states, U.S. 
possessions, local jurisdictions, and Indian tribes; law enforcement; 
regulatory agencies; other consumers of BSA data; and any other 
interested parties. FinCEN sets forth below specific questions based 
upon the statutory requirements and welcomes comments on any other 
issues relevant to the implementation of the CTA.\25\
---------------------------------------------------------------------------

    \25\ The CTA requires FinCEN to undertake a separate process, 
subsequent to the issuance of a final rule on legal entity 
beneficial ownership reporting, to revise CDD requirements for 
financial institutions in light of the new legal entity reporting 
requirements. While FinCEN welcomes comments in response to this 
ANPRM that address the effects of different design choices with 
respect to legal entity reporting on the ultimate shape of financial 
institution CDD requirements, persons wishing to comment on such 
issues should be aware that they will have another opportunity at a 
later time to comment on the revision of CDD requirements, when 
FinCEN undertakes that separate process.
---------------------------------------------------------------------------

III. Requirements of the CTA

    In general, the CTA requires a reporting company \26\--in 
accordance with rules to be issued by FinCEN--to submit to FinCEN 
information that identifies the beneficial owner(s) \27\ and 
applicant(s) \28\ of the reporting company.\29\ Specifically, reporting 
companies must report, for each identified beneficial owner and 
applicant, the following information: (i) Full legal name; (ii) date of 
birth; (iii) current residential or business street address; and (iv) a 
unique identifying number from an acceptable identification document or 
the individual's FinCEN identifier.\30\
---------------------------------------------------------------------------

    \26\ Defined at 31 U.S.C. 5336(a)(11), added by CTA Section 
6403(a).
    \27\ Defined at 31 U.S.C. 5336(a)(3), added by CTA Section 
6403(a).
    \28\ Defined at 31 U.S.C. 5336(a)(2), added by CTA Section 
6403(a).
    \29\ 31 U.S.C. 5336(b)(1), (2)(A), added by CTA Section 6403(a).
    \30\ 31 U.S.C. 5336(b)(2)(A), added by CTA Section 6403(a).
---------------------------------------------------------------------------

    The CTA defines a beneficial owner of an entity as an individual 
who, directly or indirectly, through any contract, arrangement, 
understanding, relationship, or otherwise (i) exercises substantial 
control over the entity, or (ii) owns or controls not less than 25 
percent of the ownership interests of the entity.\31\ The CTA defines a 
reporting company as a corporation, LLC, or other similar entity that 
is (i) created by the filing of a document with a secretary of state or 
a similar office under the law of a state or Indian tribe, or (ii) 
formed under the law of a foreign country and registered to do business 
in the United States by the filing of a document with a secretary of 
state or a similar office under the laws of a state or Indian tribe. 
The CTA exempts certain categories of entities from the reporting 
requirement.\32\
---------------------------------------------------------------------------

    \31\ 31 U.S.C. 5336(a)(3), added by CTA Section 6403(a). The 
definition contains certain exceptions, including, under certain 
circumstances: (i) Minors whose parent or guardian file their own 
beneficial ownership information; (ii) individuals who act as 
nominees, intermediaries, custodians, or agents; (iii) individuals 
acting solely as employees of an entity; (iv) individuals with 
interests through rights of inheritance; and (v) individuals who are 
creditors. See 31 U.S.C. 5336(a)(3)(B), added by CTA Section 
6403(a).
    \32\ 31 U.S.C. 5336(a)(11)(B), added by CTA Section 6403(a). The 
definition of reporting company specifically exempts 24 categories 
of entities, including certain types of registered entities (e.g., 
various companies registered under federal securities laws and the 
Commodity Exchange Act, FinCEN-registered money transmitters, and 
registered public accounting firms); banks; credit unions; public 
utility companies; certain tax exempt entities; entities with 
specified levels of operations in the United States; entities owned 
or controlled by other entities that qualify for one of several 
other specified exemptions; and certain kinds of dormant entities, 
among others. The Secretary, with the concurrence of the Attorney 
General and the Secretary of Homeland Security, may by regulation 
also exempt additional categories of entities.
---------------------------------------------------------------------------

    The CTA also requires that FinCEN issue a ``FinCEN identifier'' to 
an individual or entity that has submitted the required beneficial 
ownership information, if the individual or entity so requests.\33\ A 
FinCEN identifier is to be a unique identifier for each individual or 
entity that may be used for subsequent reporting to FinCEN in lieu of 
providing certain other information.\34\
---------------------------------------------------------------------------

    \33\ 31 U.S.C. 5336(b)(2)(A)(iv), (b)(3), added by CTA Section 
6403(a).
    \34\ 31 U.S.C. 5336(a)(6), (b)(2)(A)(iv), (b)(3), added by CTA 
Section 6403(a).
---------------------------------------------------------------------------

    The CTA requires FinCEN to maintain the reported beneficial 
ownership information in a secure, non-public database for not fewer 
than five years after the date on which the reporting company 
terminates.\35\
---------------------------------------------------------------------------

    \35\ 31 U.S.C. 5336(c)(1), added by CTA Section 6403(a); CTA 
Section 6402(7).
---------------------------------------------------------------------------

    The CTA prohibits the unauthorized disclosure of beneficial 
ownership information collected by FinCEN, including authorized 
recipients' subsequent disclosures for unauthorized purposes.\36\ 
Pursuant to the CTA, FinCEN may disclose beneficial ownership 
information upon receipt of: (i) A request, through appropriate 
protocols, from a federal agency engaged in national security, 
intelligence, or law enforcement activity, for use in furtherance of 
such activity; \37\ (ii) a request, through appropriate protocols, from 
a non-federal law enforcement agency with specified court 
authorization; \38\ (iii) a request from a federal agency on behalf of 
certain foreign requestors under specified conditions; \39\ (iv) a 
request by a financial institution subject to CDD requirements, with 
the consent of the reporting company, to facilitate compliance with CDD 
requirements under applicable law; \40\ and (v) a

[[Page 17561]]

request by a Federal functional regulator or other appropriate 
regulatory agency under certain circumstances.\41\ The CTA also 
authorizes officers and employees of the Department of the Treasury to 
access beneficial ownership information consistent with their official 
duties and subject to procedures and safeguards prescribed by the 
Secretary.\42\
---------------------------------------------------------------------------

    \36\ 31 U.S.C. 5336(c)(2)(A), added by CTA Section 6403(a).
    \37\ 31 U.S.C. 5336(c)(2)(B)(i)(I), added by CTA Section 
6403(a).
    \38\ 31 U.S.C. 5336(c)(2)(B)(i)(II), added by CTA Section 
6403(a).
    \39\ 31 U.S.C. 5336(c)(2)(B)(ii), added by CTA Section 6403(a).
    \40\ 31 U.S.C. 5336(c)(2)(B)(iii), added by CTA Section 6403(a).
    \41\ 31 U.S.C. 5336(c)(2)(B)(iv), added by CTA Section 6403(a).
    \42\ 31 U.S.C. 5336(c)(5), added by CTA Section 6403(a).
---------------------------------------------------------------------------

    The CTA requires the Secretary to promulgate regulations 
prescribing procedures and standards governing beneficial ownership 
reporting and the FinCEN identifier by January 1, 2022.\43\ These 
regulations will specify a subsequent effective date, which will be 
informed by information received pursuant to the notice and comment 
process. FinCEN intends to provide a reasonable timeframe for 
stakeholders to implement the regulations.
---------------------------------------------------------------------------

    \43\ 31 U.S.C. 5336(b)(5), added by CTA Section 6403(a).
---------------------------------------------------------------------------

    The regulations promulgated pursuant to the CTA are required to 
specify certain procedures, methods, and standards. Some of these 
specifications must be included in the regulations that are to be 
promulgated within a year of the CTA's enactment:
     Prescribing procedures and standards governing reporting 
of beneficial ownership information and any FinCEN identifier; \44\
---------------------------------------------------------------------------

    \44\ 31 U.S.C. 5336(b)(4)(A), added by CTA Section 6403(a).
---------------------------------------------------------------------------

     Specifying the information required to be reported and the 
reporting method; \45\
---------------------------------------------------------------------------

    \45\ 31 U.S.C. 5336(b)(1)(A)-(C), (2)(A), added by CTA Section 
6403(a).
---------------------------------------------------------------------------

     Specifying the method for reporting changes in beneficial 
ownership (for both entities and persons holding FinCEN identifiers); 
\46\ and
---------------------------------------------------------------------------

    \46\ 31 U.S.C. 5336(b)(1)(D), (3)(A)(ii), added by CTA Section 
6403(a).
---------------------------------------------------------------------------

     Specifying reporting requirements for exempt subsidiaries 
and exempt grandfathered entities that cease to be exempt.\47\
---------------------------------------------------------------------------

    \47\ 31 U.S.C. 5336(b)(1)(B), (2)(D), (2)(E), added by CTA 
Section 6403(a).
---------------------------------------------------------------------------

Others do not have to be included in the CTA regulations required by 
January 1, 2022, but the specific requirements of the reporting 
regulations that must be finalized by that date may affect these other 
specifications:
     The form and manner in which information shall be provided 
by FinCEN to a financial institution for CDD, and to certain regulatory 
agencies for certain purposes; \48\
---------------------------------------------------------------------------

    \48\ 31 U.S.C. 5336(c)(2)(C), added by CTA Section 6403(a).
---------------------------------------------------------------------------

     Protocols to protect the security and confidentiality of 
beneficial ownership information, to include obligations on requesting 
agencies; \49\ and
---------------------------------------------------------------------------

    \49\ 31 U.S.C. 5336(c)(3), added by CTA Section 6403(a)).
---------------------------------------------------------------------------

     Establishment of a safe harbor for persons seeking to 
amend previously submitted but inaccurate beneficial ownership 
information.\50\
---------------------------------------------------------------------------

    \50\ 31 U.S.C. 5336(h)(3)(C), added by CTA Section 6403(a).
---------------------------------------------------------------------------

Further, the CTA requires the Secretary to take certain actions in 
developing these regulations. This includes an obligation to reach out 
to members of the small business community and other appropriate 
parties to ensure efficiency and effectiveness of the process for the 
entities subject to the requirements of the CTA.\51\ Additionally, in 
promulgating the required regulations prescribing procedures and 
standards governing reporting of beneficial ownership information and 
any FinCEN identifier, the CTA requires FinCEN, to the greatest extent 
practicable, to:
---------------------------------------------------------------------------

    \51\ 31 U.S.C. 5336(g), added by CTA Section 6403(a).
---------------------------------------------------------------------------

     Establish partnerships with State, local, and Tribal 
governmental agencies;
     Collect required identity information of beneficial owners 
through existing federal, state, and local processes and procedures;
     Minimize burdens on reporting companies associated with 
the collection of the required information, in light of the private 
compliance costs placed on legitimate businesses, including by 
identifying any steps taken to mitigate the costs relating to 
compliance with the collection of information; and
     Collect the required information in a form and manner that 
ensures the information is highly useful in (a) facilitating important 
national security, intelligence, and law enforcement activities, and 
(b) confirming beneficial ownership information provided to financial 
institutions in order to facilitate financial institutions' compliance 
with AML, CFT, and CDD requirements under applicable law.\52\
---------------------------------------------------------------------------

    \52\ 31 U.S.C. 5336(b)(1)(F), added by CTA Section 6403(a). 
FinCEN anticipates that fulfillment of these requirements will 
involve in-depth engagement with federal as well as state, local, 
and tribal government agencies.
---------------------------------------------------------------------------

IV. Questions for Comment

    FinCEN invites comments on all aspects of the CTA, but specifically 
seeks comments on the questions listed below. FinCEN encourages 
commenters to reference specific question numbers to facilitate 
FinCEN's review of comments.
Definitions
    (1) The CTA requires reporting of beneficial ownership information 
by ``reporting companies,'' which are defined, subject to certain 
exceptions, as including corporations, LLCs, or any ``other similar 
entity'' that is created by the filing of a document with a secretary 
of state or a similar office under the law of a state or Indian tribe 
or formed under the law of a foreign country and registered to do 
business in the United States by the filing of such a document.
    a. How should FinCEN interpret the phrase ``other similar entity,'' 
and what factors should FinCEN consider in determining whether an 
entity qualifies as a similar entity?
    b. What types of entities other than corporations and LLCs should 
be considered similar entities that should be included or excluded from 
the reporting requirements?
    c. If possible, propose a definition of the type of ``other similar 
entity'' that should be included, and explain how that type of entity 
satisfies the statutory standard, as well as why that type of entity 
should be covered. For example, if a commenter thinks that state-
chartered non-depository trust companies should be considered similar 
entities and required to report, the commenter should explain how, in 
the commenter's opinion, such companies satisfy the requirement that 
they be formed by filing a document with a secretary of state or 
``similar office.''
    (2) The CTA limits the definition of reporting companies to 
corporations, LLCs, and other similar entities that are ``created by 
the filing of a document with a secretary of state or a similar office 
under the law of a State or Indian Tribe'' or ``registered to do 
business in the United States by the filing of a document with a 
secretary of state or a similar office under the laws of a State or 
Indian Tribe.''
    a. Does this language describe corporate filing practices and the 
applicable law of the states and Indian tribes sufficiently clearly to 
avoid confusion about whether an entity does or does not meet this 
requirement?
    b. If not, what additional clarifications could make it easier to 
determine whether this requirement applies to a particular entity?
    (3) The CTA defines the ``beneficial owner'' of an entity, subject 
to certain exceptions, as ``an individual who, directly or indirectly, 
through any contract, arrangement, understanding, relationship, or 
otherwise'' either ``exercises substantial control over the entity'' or 
``owns or controls not less than 25 percent of the ownership

[[Page 17562]]

interests of the entity.'' Is this definition, including the specified 
exceptions, sufficiently clear, or are there aspects of this definition 
and specified exceptions that FinCEN should clarify by regulation?
    a. To what extent should FinCEN's regulatory definition of 
beneficial owner in this context be the same as, or similar to, the 
current CDD rule's definition or the standards used to determine who is 
a beneficial owner under 17 CFR 240.13d-3 adopted under the Securities 
Exchange Act of 1934?
    b. Should FinCEN define either or both of the terms ``own'' and 
``control'' with respect to the ownership interests of an entity? If 
so, should such a definition be drawn from or based on an existing 
definition in another area, such as securities law or tax law?
    c. Should FinCEN define the term ``substantial control''? If so, 
should FinCEN define ``substantial control'' to mean that no reporting 
company can have more than one beneficial owner who is considered to be 
in substantial control of the company, or should FinCEN define that 
term to make it possible that a reporting company may have more than 
one beneficial owner with ``substantial control''?
    (4) The CTA defines the term ``applicant'' as an individual who 
``files an application to form'' or ``registers or files an application 
to register'' a reporting company under applicable state or tribal law. 
Is this language sufficiently clear, in light of current law and 
current filing and registration practices, or should FinCEN expand on 
this definition, and if so how?
    (5) Are there any other terms used in the CTA, in addition to those 
the CTA defines, that should be defined in FinCEN's regulations to 
provide additional clarity? If so, which terms, why should FinCEN 
define such terms by regulation, and how should any such terms be 
defined?
    (6) The CTA contains numerous defined exemptions from the 
definition of ``reporting company.'' Are these exemptions sufficiently 
clear, or are there aspects of any of these definitions that FinCEN 
should clarify by regulation?
    (7) In addition to the statutory exemptions from the definition of 
``reporting company,'' the CTA authorizes the Secretary, with the 
concurrence of the Attorney General and the Secretary of Homeland 
Security, to exempt any other entity or class of entities by 
regulation, upon making certain determinations.\53\ Are there any 
categories of entities that are not currently subject to an exemption 
from the definition of ``reporting company'' that FinCEN should 
consider for an exemption pursuant to this authority, and if so why?
---------------------------------------------------------------------------

    \53\ 31 U.S.C. 5336(a)(11)(B)(xxiv), added by CTA Section 
6403(a).
---------------------------------------------------------------------------

    (8) If a trust or special purpose vehicle is formed by a filing 
with a secretary of state or a similar office, should it be included or 
excluded from the reporting requirements?
    (9) How should a company's eligibility for any exemption from the 
reporting requirements, including any exemption from the definition of 
``reporting company,'' be determined?
    a. What information should FinCEN require companies to provide to 
qualify for these exemptions, and what verification process should that 
information undergo?
    b. Should there be different information requirements for operating 
companies and holding companies, for active companies and dormant 
companies, or are there other bases for distinguishing between types of 
companies?
    c. Should exempt entities be required to file periodic reports to 
support the continued application of the relevant exemption (e.g., 
annually)?
Reporting of Beneficial Ownership Information
    (10) What information should FinCEN require a reporting company to 
provide about the reporting company itself to ensure the beneficial 
ownership database is highly useful to authorized users?
    (11) What information should FinCEN require a reporting company to 
provide about the reporting company's corporate affiliates, parents, 
and subsidiaries, particularly given that in some cases multiple 
companies can be layered on top of one another in complex ownership 
structures?
    (12) Should a reporting company be required to provide information 
about the reporting company's corporate affiliates, parents, and 
subsidiaries as a matter of course, or only when that information has a 
bearing on the reporting company's ultimate beneficial owner(s)?
    (13) What information, if any, should FinCEN require a reporting 
company to provide about the nature of a reporting company's 
relationship to its beneficial owners (including any corporate 
intermediaries or any other contract, arrangement, understanding, or 
relationship), to ensure that the beneficial ownership database is 
highly useful to authorized users?
    (14) Persons currently obligated to file reports with FinCEN 
overwhelmingly do so electronically, either on a form-by-form basis or 
in batches using proprietary software developed by private-sector 
technology service providers.
    a. Should FinCEN allow electronic filing of required information 
about reporting companies (including the termination of such 
companies), beneficial owners, and applicants under the CTA?
    b. Should FinCEN allow or support any mechanisms other than direct 
electronic filing?
    c. Should FinCEN allow or support direct batch filing of required 
information?
    d. Should there be any differences among the mechanisms used for 
different types of information or different types of filers?
    e. Should any additional or alternative reporting system involve 
the collection of information from the states and Indian tribes, and if 
so how?
    f. Should the filing mechanisms for reporting companies be 
different for entities that were previously exempt for one reason or 
another (including exempt subsidiaries and exempt grandfathered 
entities under section 5336(b)(2)(D) and (E)) and lose that exemption? 
If so how?
    (15) Section 5336(b)(2)(C) requires written certifications to be 
filed with FinCEN by exempt pooled investment vehicles described in 
section 5336(a)(11)(B)(xviii) that are formed under the laws of a 
foreign country.
    a. By what method should these certifications be filed?
    b. What information should be included in these certifications?
    c. Should there be a mechanism through which such filings could be 
made to foreign authorities and forwarded to FinCEN, or should such 
filings have to be made directly to FinCEN?
    d. What information should be included in these certifications 
(e.g., what information would allow authorities to follow up on 
certifications containing false information)?
    e. Should these certifications be accessible to database users, and 
if so, should they be accessible on the same terms as beneficial 
ownership information of reporting companies?
    (16) What burdens do you anticipate in connection with the new 
reporting requirements? Please identify any burdens with specificity, 
and estimate the dollar costs of these burdens if possible. How could 
FinCEN minimize any such burdens on reporting companies associated with 
the collection of beneficial ownership information in a manner that 
ensures the information is highly useful in

[[Page 17563]]

facilitating important national security, intelligence, and law 
enforcement activities and confirming beneficial ownership information 
provided to financial institutions, consistent with its statutory 
obligations under the CTA?
    (17) Section 5336(e)(1) requires the Secretary to take reasonable 
steps to provide notice to persons of their reporting obligations.
    a. What steps should be taken to provide such notice?
    b. Should those steps include direct communications such as mailed 
notices, and if so to whom should notices be mailed?
    c. What type of information should be included in such a notice, 
for example, the purposes and uses of the data, and how to access and 
correct the information?
    d. Should the notice be followed by an explicit acknowledgement of 
the reporting company, or consent of the beneficial owner or applicant 
if the owner or applicant is submitting the information, to the 
handling of beneficial ownership information as stated in the notice 
and applicable law?
    (18) Section 5336(e)(2) requires states and Indian tribes, as a 
condition of receiving certain funds, to have their Secretary of State 
or a similar office in each state or Indian tribe periodically provide 
notice of reporting obligations and a copy of, or internet link to, the 
reporting company form created by FinCEN.
    a. How should this requirement be implemented?
    b. What form should the notice take?
    c. Should this notice be provided yearly, or on some other periodic 
schedule?
    (19) What should reporting companies or individuals holding FinCEN 
identifiers be required to do to satisfy the requirement of section 
5336(b)(1)(D) that they update in a timely manner the information they 
have submitted when it changes, such as when beneficial owners or 
holders of FinCEN identifiers (i) transfer substantial control to other 
individuals; (ii) change their legal names or their reported 
residential or business street addresses; or (iii) die; or (iv) when a 
previously acceptable identification document expires? For example, 
should the reporting companies or individuals be required to file a new 
report, or provide notice only of the information that has changed?
    (20) Should reporting companies be required to affirmatively 
confirm the continuing accuracy of previously submitted beneficial 
ownership information on a periodic basis (e.g., annually)? How should 
such confirmation be communicated to FinCEN?
    (21) For those reporting companies without FinCEN identifiers, what 
should be considered a ``timely manner'' \54\ for updating a change in 
beneficial ownership?
---------------------------------------------------------------------------

    \54\ 31 U.S.C. 5336(b)(3)(A)(ii), added by CTA Section 6403(a).
---------------------------------------------------------------------------

    a. Should this period differ based on the type of reporting 
company?
    b. What factors should be taken into account in determining this 
period?
    c. How much time should reporting companies be given to update 
beneficial owner information upon a change of ownership?
    d. What are the benefits or drawbacks of allowing a longer period 
to report a change of beneficial ownership?
    (22) Section 5336(h)(3)(C) contains a safe harbor for persons who 
seek to correct previously submitted but inaccurate beneficial 
ownership information pursuant to FinCEN regulations. How should 
FinCEN's regulations define the scope of this safe harbor? Should the 
nature of the inaccuracy (e.g., a misspelled address versus the 
complete omission of a beneficial owner) be relevant to the 
availability of the safe harbor?
    (23) What steps should reporting companies be required to take to 
support and confirm the accuracy of beneficial ownership information?
    a. Should reporting companies be required to certify the accuracy 
of their information when they submit it?
    b. If so, what should this certification cover?
    c. Should reporting companies be required to submit copies of a 
beneficial owner's acceptable identification document?
    (24) What steps should FinCEN take to ensure that beneficial 
ownership information being reported is accurate and complete?
    a. With respect to other BSA reports, FinCEN e-filing protocols 
prohibit filings from being made with certain blank fields, and 
automatically format certain fields to ensure that letters are not 
entered for numbers and vice versa, etc. The filing protocols, however, 
do not involve independent FinCEN verification of information filed. 
Should FinCEN take similar or additional steps in connection with the 
filing of beneficial ownership information?
    b. If so, what similar or additional steps should FinCEN take?
    (25) Should a reporting company be required to report information 
about a company's ``applicant'' or ``applicants'' (the individual or 
individuals who file the application to form or register a reporting 
company) in any report after the reporting company's initial report to 
FinCEN? Why or why not?
FinCEN Identifier
    (26) In what situations will an individual or entity wish to use 
the FinCEN identifier? How can FinCEN best protect both the privacy 
interests underlying an individual's or entity's desire to use the 
FinCEN identifier, and the identifying information that must be 
provided to FinCEN by an individual or entity wishing to obtain and use 
the FinCEN identifier?
    (27) What form should the FinCEN identifier take?
    a. How long should it be?
    b. Should it be alphabetical, numeric, or alphanumeric?
    c. Should it contain embedded information such as a filing year, a 
geographic code, a sequential number, or numbers shared among related 
persons or entities, or should it be generated independently for each 
individual or entity?
    d. Should it resemble or be derived from another identifier 
provided by another authority?
    e. Should it resemble the document numbers of other reports filed 
with FinCEN under the BSA?
    f. Should the form of FinCEN identifiers for individuals and legal 
entities be different? If so, how and why?
    (28) How can FinCEN best ensure a one-to-one relationship between 
individuals or entities and their FinCEN identifiers, in light of the 
possibility that individuals and entities may mistakenly or 
intentionally attempt to apply for more than one FinCEN identifier? 
\55\
---------------------------------------------------------------------------

    \55\ For example, this could happen when different employees of 
the same organization, without realizing, apply independently for a 
FinCEN identifier, or when an individual applies more than once 
using identity numbers from different forms of identification 
mistakenly thinking it is necessary to obtain a separate FinCEN 
identification for each company of which the individual is a 
beneficial owner.
---------------------------------------------------------------------------

    (29) How can FinCEN best protect FinCEN identifiers from being used 
without individuals' and entities' authorization? Should protections 
include specific regulatory requirements or prohibitions?
    (30) As noted in the CTA, in some cases multiple companies can be 
layered on top of one another in complex ownership structures. Given 
that there may be multiple entities within an ownership structure of a 
reporting company that are identified by FinCEN identifiers, how can 
FinCEN implement the FinCEN identifier in a way that reduces the burden 
to financial

[[Page 17564]]

institutions of using the FinCEN database when reporting companies with 
complex ownership structures seek to open an account?
    (31) What should the process be to obtain a FinCEN identifier?
    a. a) Should the FinCEN identifier be secured by an applicant or 
beneficial owner prior to filing an application to form a corporation, 
LLC, or other similar entity under the laws of a state or Indian tribe?
    b. b) How, if at all, should FinCEN verify an individual's identity 
before providing a FinCEN identifier?
    c. c) If an applicant or beneficial owner chooses not to apply for 
a FinCEN identifier, should FinCEN create any limitations--in addition 
to those in the statutory definition of ``acceptable identification 
document''--on the types of unique identifying numbers that can be 
submitted?
Security and use of Beneficial Ownership and Applicant Information
    (32) When a state, local, or tribal law enforcement agency requests 
beneficial ownership information pursuant to an authorization from a 
court of competent jurisdiction to seek the information in a criminal 
or civil investigation, how, if at all, should FinCEN authenticate or 
confirm such authorization?
    (33) Should FinCEN provide a definition or criteria for determining 
whether a court has ``competent jurisdiction'' or has ``authorized'' 
such an order? If so, what definition or criteria would be appropriate?
    (34) As a U.S. Government agency, FinCEN is subject to strict 
security and privacy laws, regulations, and other requirements that 
will protect the security and confidentiality of beneficial ownership 
and applicant information. What additional security and privacy 
measures should FinCEN implement to protect this information and limit 
its use to authorized purposes, which includes facilitating important 
national security, intelligence, and law enforcement activities as well 
as financial institutions' compliance with AML, CFT, and CDD 
requirements under applicable law? Would it be sufficient to make 
misuse of such information subject to existing penalties for violations 
of the BSA and FinCEN regulations, or should other protections be put 
in place, and if so what should they be?
    (35) How can FinCEN make beneficial ownership information available 
to financial institutions with CDD obligations so as to make that 
information most useful to those financial institutions?
    a. Please describe whether financial institutions should be able to 
use that information for other customer identification purposes, 
including verification of customer information program information, 
with the consent of the reporting company?
    b. Please describe whether FinCEN should make financial institution 
access more efficient by permitting reporting companies to pre-
authorize specific financial institutions to which such information 
should be made available?
    c. In response to requests from financial institutions for 
beneficial ownership information, pursuant to 31 U.S.C. 5336(c)(2)(A), 
what is a reasonable period within which FinCEN should provide a 
response? Please also describe what specific information should be 
provided.
    (36) How should FinCEN handle updated reporting for changes in 
beneficial ownership when beneficial ownership information has been 
previously requested by financial institutions, federal functional 
regulators, law enforcement, or other appropriate regulatory agencies?
    a. If a requestor has previously requested and received beneficial 
ownership information concerning a particular legal entity, should the 
requester automatically receive notification from FinCEN that an update 
to the beneficial ownership information was subsequently submitted by 
the legal entity customer?
    b. If so, how should this notification be provided?
    c. Should a requesting entity have to opt in to receive such 
notification of updated reporting?
    (37) One category of authorized access to beneficial ownership 
information from the FinCEN database involves ``a request made by a 
Federal functional regulator or other appropriate regulatory agency.'' 
\56\ How should the term ``appropriate regulatory agency'' be 
interpreted? Should it be defined by regulation? If so, why and how?
---------------------------------------------------------------------------

    \56\ 31 U.S.C. 5336(c)(2)(B)(iv), added by CTA Section 6403(a).
---------------------------------------------------------------------------

    (38) In what circumstances should applicant information be 
accessible on the same terms as beneficial ownership information (i.e., 
to agencies engaged in national security, intelligence, or law 
enforcement; to non-federal law enforcement agencies; to federal 
agencies, on behalf of certain foreign requestors; to federal 
functional regulators or other agencies; and to financial institutions 
subject to CDD requirements). If financial institutions are not 
required to consider applicant information in connection with due 
diligence on a reporting company opening an account, for example, 
should a financial institution's terms of access to applicant 
information differ from the terms of its access to beneficial ownership 
information?
Cost, Process, Outreach, and Partnership
    (39) What specific costs would CTA requirements impose--in terms of 
time, money, and human resources--on small businesses? Are those costs 
greater for certain types of small businesses than others? What 
specifically can FinCEN do to minimize those costs, for all small 
businesses or for some types in particular?
    (40) Are there alternatives to a single reporting requirement for 
all reporting companies that could create a less costly alternative for 
small businesses?
    (41) How can FinCEN best reach out to members of the small business 
community to ensure the efficiency and effectiveness of the filing 
process for entities subject to the requirements of the CTA?
    (42) Are there other business constituencies to which FinCEN should 
reach out, and if so, who are they?
    (43) How can FinCEN best reach out to financial institutions to 
ensure the efficiency and effectiveness of the process by which 
financial institutions could potentially access the beneficial 
ownership information held by FinCEN?
    (44) What burdens would CTA requirements impose on state, local, 
and tribal governmental agencies? In particular, what additional time, 
money, and human resources would state, local, and tribal governments 
have to secure and expend--or reallocate from other duties, and if the 
latter what duties would be compromised or services impaired? How, if 
at all, would any of these burdens or allocations of time or money vary 
according to the size or other characteristics of a jurisdiction--would 
smaller jurisdictions find it easier or harder to handle the costs 
associated with CTA requirements?
    (45) How should FinCEN minimize any burdens on state, local, and 
tribal governmental agencies associated with the collection of 
beneficial ownership information, while still achieving the purposes of 
the CTA?
    (46) How can FinCEN best partner with state, local, and tribal 
governmental agencies to achieve the purposes of the CTA?
    (47) How can FinCEN collect the identity information of beneficial 
owners through existing Federal, state, local, and tribal processes and 
procedures?

[[Page 17565]]

    a. Would FinCEN use of such processes or procedures be practicable 
and appropriate?
    b. Would FinCEN use of or reliance on existing processes and 
procedures help to lessen the costs to state, local, and tribal 
government agencies, or would it increase those costs?
    c. Would FinCEN use of existing Federal, state, local, and tribal 
processes and procedures help to lessen the costs to small businesses 
affected by CTA requirements, or would it increase those costs?
    (48) The process of forming legal entities may have ramifications 
that extend beyond the legal and economic consequences for legal 
entities themselves, and the reporting of beneficial ownership 
information about legal entities may have ramifications that extend 
beyond the effect of mobilizing such information for AML/CFT purposes. 
How can FinCEN best engage representatives of civil society 
stakeholders that may not be directly affected by a beneficial 
ownership information reporting rule but that are concerned for such 
larger ramifications?

V. Regulatory Planning and Review

    This advance notice of proposed rulemaking is a significant 
regulatory action under Executive Order 12866 and has been reviewed by 
the Office of Management and Budget.

VI. Conclusion

    Implementing an effective system to identify, collect, and permit 
authorized uses of beneficial ownership information will strengthen 
U.S. national security and the integrity of the U.S. financial system, 
and protect people from harm. With this ANPRM, FinCEN seeks input on 
how FinCEN should implement such a system, consistent with the 
requirements of the CTA, to maximize benefits while minimizing burdens 
on reporting companies. FinCEN seeks input from the public on the 
questions set forth above, including from regulated parties; state, 
local, and Tribal governments; law enforcement; regulators; other 
consumers of BSA data; and any other interested parties. FinCEN also 
welcomes comments on all aspects of the ANPRM and any other aspects of 
implementation of the CTA. FinCEN encourages all interested parties to 
provide their views.

    By the Department of the Treasury.
AnnaLou Tirol,
Deputy Director, Financial Crimes Enforcement Network.
[FR Doc. 2021-06922 Filed 4-1-21; 8:45 am]
BILLING CODE 4810-02-P