Beneficial Ownership Information Reporting Deadline Extension for Reporting Companies Created or Registered in 2024, 66730-66732 [2023-21226]

Agencies

• DEPARTMENT OF THE TREASURY
• Financial Crimes Enforcement Network

[Federal Register Volume 88, Number 187 (Thursday, September 28, 2023)]
[Proposed Rules]
[Pages 66730-66732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21226]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 1010

RIN 1506-AB62


Beneficial Ownership Information Reporting Deadline Extension for 
Reporting Companies Created or Registered in 2024

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

ACTION: Notice of Proposed Rulemaking (NPRM).

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SUMMARY: FinCEN is proposing to amend the beneficial ownership 
information (BOI) reporting rule (Reporting Rule) to extend the filing 
deadline for certain BOI reports. Under the Reporting Rule, entities 
created or registered on or after the rule's effective date of January 
1, 2024, must file initial BOI reports with FinCEN within 30 days of 
notice of their creation or registration. This proposed amendment would 
extend that filing deadline from 30 days to 90 days for entities 
created or registered on or after January 1, 2024, and before January 
1, 2025, to give those entities additional time to understand the new 
reporting obligation and collect the necessary information to complete 
the filing. Entities created or registered on or after January 1, 2025, 
would have 30 days to file their BOI reports with FinCEN, as required 
under the Reporting Rule.

DATES: Written comments on this proposed rule may be submitted on or 
before October 30, 2023.

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-2023-0014 and the Office of Management and Budget (OMB) control 
number 1506-0076.
     Mail: Policy Division, Financial Crimes Enforcement 
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2023-0014 and OMB control number 1506-0076.

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

SUPPLEMENTARY INFORMATION:

I. Introduction

    In this NPRM, FinCEN is proposing to amend the Reporting Rule \1\ 
to extend the deadline to file initial BOI reports for entities created 
or registered on or after the rule's effective date of January 1, 2024, 
and before January 1, 2025. Under the Reporting Rule, such entities 
must file initial BOI reports with FinCEN within 30 days of notice of 
their creation or registration. The proposed amendment would extend 
that filing deadline from 30 days to 90 days for entities created or 
registered on or after January 1, 2024, and before January 1, 2025, to 
give those entities additional time to understand the new reporting 
obligation and collect the necessary information to complete their 
filings. Entities created or registered on or after January 1, 2025, 
would have 30 days to file their BOI reports with FinCEN, as required 
under the Reporting Rule.
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    \1\ Treasury, FinCEN, Beneficial Ownership Information Reporting 
Requirements, 87 FR 59498 (Sept. 30, 2022).
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II. Background

    On September 30, 2022, FinCEN published the Reporting Rule, with an 
effective date of January 1, 2024.\2\ The Reporting Rule requires 
certain corporations, limited liability companies, and other similar 
entities (``reporting companies'') \3\ to report certain identifying 
information about the beneficial owners who own or control such 
entities and the company applicants who form or register them.\4\ These 
requirements are intended to facilitate access to BOI for certain 
authorized recipients, including law enforcement and regulators, for 
the purpose of countering money laundering, the financing of terrorism, 
and other illicit activity.\5\ The Corporate Transparency Act (CTA) 
directs FinCEN to promulgate regulations that achieve the objectives of 
the statute, while minimizing burdens on reporting companies to the 
greatest extent practicable and ensuring that the BOI collected is 
``highly useful'' for national security, intelligence, and law 
enforcement activities.\6\
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    \2\ The Reporting Rule is the first in a series of rulemakings 
to implement the CTA, enacted on January 1, 2021, as part of the 
Anti-Money Laundering Act of 2020 and codified at 31 U.S.C. 5336. 
The CTA is Title LXIV of the William M. (Mac) Thornberry National 
Defense Authorization Act for Fiscal Year 2021, Public Law 116-283 
(Jan. 1, 2021) (the NDAA). Division F of the NDAA is the Anti-Money 
Laundering Act of 2020, which includes the CTA.
    \3\ See 31 U.S.C. 5336(a)(11).
    \4\ See U.S. Department of the Treasury (Treasury), FinCEN, 
Beneficial Ownership Information Reporting Requirements, 87 FR 
59498, 59498-99 (Sept. 30, 2022).
    \5\ Public Law 116-283, Section 6402 (Jan. 1, 2021).
    \6\ Id.
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    The Reporting Rule requires reporting companies to report to FinCEN 
within prescribed time periods information about themselves, as well as 
information about two categories of individuals: (1) the beneficial 
owners of the reporting company; and (2) the company applicants, who 
are the individuals who filed a document to create the reporting 
company or register it to do business. For a domestic or foreign 
reporting company created or registered to do business in the United 
States before the rule's effective date of January 1, 2024, an initial 
BOI report must be filed by January 1, 2025.\7\ For a reporting company 
created or registered on or after January 1, 2024, however, the 
Reporting Rule requires that an initial BOI report must be filed within 
30 days of the earlier of the date on which it receives actual notice 
or public notice that it has been created or registered.\8\
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    \7\ 31 CFR 1010.380(a)(iii).
    \8\ 31 CFR 1010.380(a)(i)-(ii).
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III. Proposed Extension of Time for Certain Reporting Companies

    FinCEN proposes to extend the period for certain reporting 
companies to file initial BOI reports. Under this proposed amendment to 
the Reporting Rule, reporting companies created or registered on or 
after January 1, 2024, and before January 1, 2025, would have 90 days 
to submit their initial BOI

[[Page 66731]]

reports, instead of 30 days.\9\ Reporting companies formed on or after 
January 1, 2025, would continue to be required to submit their initial 
BOI reports within 30 days.
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    \9\ CTA, Section 6402(8)(a).
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    In the preamble to the Reporting Rule, FinCEN explained its 
expectation that a 30-day timeframe for initial reports would provide 
sufficient time for reporting companies to resolve various issues after 
initial creation, including obtaining necessary information and 
identifying their beneficial owners with sufficient time to file an 
initial report.\10\ Upon continued dialogue with partners in the 
private sector, including trade associations, non-profits, and other 
key stakeholder organizations, FinCEN believes that extending the 
deadline for reporting companies created or registered on or after 
January 1, 2024, and before January 1, 2025, to file an initial BOI 
report from 30 to 90 days will have multiple benefits.\11\
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    \10\ Treasury, FinCEN, Beneficial Ownership Information 
Reporting Requirements, 87 FR 59498, 59511 (Sept. 30, 2022).
    \11\ Although the CTA provides that reports are to be filed by 
entities created or registered on or after January 1, 2024 ``at the 
time of formation or registration,'' FinCEN may prescribe an 
exemption from that requirement consistent with the directive to 
ensure that the database is highly useful to law enforcement while 
at the same time minimizing burdens on reporting companies. FinCEN 
believes it is appropriate to do so for entities created or 
registered on or after January 1, 2024 and before January 1, 2025 
for the reasons explained below. See 31 U.S.C. 5336(b)(1)(C). Under 
31 U.S.C. 5318(a)(7), FinCEN has authority to ``prescribe an 
appropriate exemption from a requirement under this subchapter,'' 
which includes the CTA in section 5336.
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    First, this extension will increase the time available for these 
entities to understand and comply with their new regulatory obligations 
under the Reporting Rule. FinCEN recognizes that there are many aspects 
of the Reporting Rule that newly created or registered entities will 
need to navigate, including whether the new legal entity falls under 
the definition of ``reporting company'' or qualifies for an exemption, 
the meaning of ``beneficial owner'' under the rule, and the application 
of other key terms and requirements. FinCEN is developing simple, easy-
to-read guidance and educational materials such as frequently asked 
questions (FAQs), videos, infographics, and compliance guides to help 
reporting companies comply with the new rules. FinCEN published initial 
guidance and educational materials on March 24, 2023, and a Small 
Entity Compliance Guide on September 18, 2023. FinCEN aims to publish 
additional materials in the near future. Additionally, FinCEN continues 
to conduct extensive outreach to ensure that all stakeholders 
understand their obligations and how best to seek assistance to have 
their questions answered. Yet FinCEN recognizes the novelty of the BOI 
reporting requirement and the need to provide filers, many of which are 
interfacing with FinCEN for the first time, particular consideration 
when it comes to the reporting deadline for entities created or 
registered in 2024.
    Second, the extension will provide new reporting companies 
additional time to obtain the information necessary to complete their 
initial BOI reports. The Reporting Rule requires reporting companies to 
obtain and report certain BOI to FinCEN. At the outset of the 
implementation of the rule, making and responding to requests for BOI 
will be an unfamiliar exercise for many new companies or third-party 
service providers, and beneficial owners. FinCEN recognizes that 
additional time could greatly benefit these parties, particularly those 
who have not interacted with FinCEN before.\12\
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    \12\ See Reporting Rule, 31 CFR 1010.380(b)(1)(i).
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    Furthermore, the extension will give reporting companies more time 
to resolve questions that may arise in the process of completing their 
initial BOI reports. FinCEN continues to work actively to develop and 
issue guidance and educational materials such as FAQs, videos, 
infographics, and compliance guides to help reporting companies 
complete and submit their BOI reports to FinCEN. FinCEN also continues 
to engage in extensive outreach to ensure that stakeholders are able to 
submit BOI reports in a streamlined and efficient manner. Reporting 
companies and other stakeholders may want more time to become familiar 
with these guidance and educational materials given the new obligations 
and reporting timeframes. In addition, reporting companies may wish to 
consult with a third-party service provider such as an accountant or 
lawyer, or to contact FinCEN with an inquiry. FinCEN aims to establish 
a contact center prior to January 1, 2024, to field questions about the 
BOI reporting requirements from reporting companies and other 
stakeholders. Extending the reporting deadline from 30 to 90 days will 
allow all parties additional time to resolve questions about the new 
reporting requirements. It will also help FinCEN manage the volume of 
contact center inquiries and provide more comprehensive customer 
service by giving reporting companies and other stakeholders more time 
to consult guidance materials and internally resolve questions about 
the new requirements.
    The proposed extension to 90 days would apply to both domestic and 
foreign entities created or registered in the United States in the 
first year after the Reporting Rule becomes effective, but entities 
created or registered on or after January 1, 2025, would remain subject 
to the 30-day deadline established in the Reporting Rule. FinCEN 
believes that extending the time period in the first year is 
appropriate because of the novelty of the beneficial ownership 
reporting regime created by Congress under the CTA. For the first time, 
the United States is now requiring legal entities to submit beneficial 
ownership information to a centralized, Federal Government database, 
and the reporting requirements are likely to be entirely new to 
business owners, corporate formation professionals, secretary of state 
offices, and other key stakeholders. After January 1, 2025, however, 
FinCEN expects that the BOI reporting requirements will be more 
familiar to those involved in corporate formation, and newly created or 
registered companies should be in a better position to promptly file 
their BOI reports.
    Although FinCEN believes that providing this additional time and 
flexibility for reporting companies created or registered in 2024 to 
file their initial BOI reports will benefit reporting companies and 
their service providers, FinCEN recognizes that the extension could 
cause a delay in submissions to the BOI database in the first year of 
its operation. For example, under the proposed rule, if entities are 
created or registered on December 31, 2024, they would have until April 
1, 2025 (90 days after December 31, 2024) to submit their initial BOI 
reports. In contrast, under the Reporting Rule, law enforcement could 
expect all compliant reporting companies created or registered on or 
before December 31, 2024, to have submitted their initial BOI reports 
by January 30, 2025 (30 days after December 31, 2024). With all of that 
taken into account, FinCEN still believes that the potential adverse 
effects of any such delay in the first year of the program are 
outweighed by the relief they will provide for small businesses, as 
explained above. FinCEN solicits comment on this assessment, and on 
whether there are any other potential consequences of the extension 
that it has not identified.

IV. Regulatory Analysis

    FinCEN has analyzed the proposed rule as required under Executive 
Orders 12866, 13563, and 14094; the Regulatory

[[Page 66732]]

Flexibility Act; the Unfunded Mandates Reform Act; and the Paperwork 
Reduction Act. This proposed rule would not have an annual effect on 
the economy of $200 million or otherwise constitute a ``significant 
regulatory action'' as defined in section 3(f) of Executive Order 
12866, as amended. Pursuant to the Regulatory Flexibility Act, FinCEN 
certifies that the proposed rule would not have a significant economic 
impact on a substantial number of small entities. FinCEN assessed that 
this proposed rule would result in no additional costs to small 
businesses. Furthermore, pursuant to the Unfunded Mandates Reform Act, 
FinCEN has concluded that the proposed rule would not result in an 
expenditure of $177 million or more annually by state, local, and 
Tribal governments or by the private sector.\13\ FinCEN does not 
estimate any burden, as defined by the Paperwork Reduction Act, 
associated with the proposed rule.
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    \13\ The Unfunded Mandates Reform Act requires an assessment of 
mandates that will result in an annual expenditure of $100 million 
or more, adjusted for inflation. The U.S. Bureau of Economic 
Analysis reports the annual value of the gross domestic product 
(GDP) deflator in 1995, the year of the Unfunded Mandates Reform 
Act, as 71.823, and as 127.224 in 2022. See U.S. Bureau of Economic 
Analysis, ``Table 1.1.9. Implicit Price Deflators for Gross Domestic 
Product'' (accessed Friday, June 2, 2023). Thus, the inflation 
adjusted estimate for $100 million is 127.224/71.823 x 100 = $177 
million.
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    FinCEN assesses that the extension of the reporting deadline for 
entities created or registered in the first year of the reporting 
requirement will not impose new costs. The costs for BOI reporting have 
been estimated in the regulatory impact analysis (RIA) in the Reporting 
Rule.\14\ In that RIA, FinCEN estimated the total number of reporting 
companies in 2024, the first year that the Reporting Rule will go into 
effect, to be approximately 32.6 million. The Reporting Rule RIA also 
estimated the costs for these reporting companies in filing their 
initial BOI reports, analyzing the potential cost of each step in the 
filing process.\15\ FinCEN's analysis in the final Reporting Rule would 
not be changed by an extension of the reporting timeline for new 
reporting companies created or registered in 2024 from 30 days to 90 
days.
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    \14\ See Treasury, FinCEN, Beneficial Ownership Reporting 
Requirements, 87 FR 59549-59591 (Dec. 8, 2021).
    \15\ Id.
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    FinCEN acknowledges that this change would shift some of the 
estimated aggregate cost in the Reporting Rule RIA from ``Year 1'' 
(2024) to ``Year 2'' (2025) in the analysis. This shift in cost is 
difficult to quantify. However, FinCEN assesses that the shift of these 
costs would be de minimis and would not change the conclusions of the 
Reporting Rule's RIA. Additionally, the per-reporting company burden 
and cost estimate in the Reporting Rule RIA would not be affected by 
this proposed change.
    Furthermore, as discussed in Section III, FinCEN notes that the 
proposed change in the reporting timeline for reporting companies 
created or registered in 2024 would likely have multiple benefits. 
These benefits include additional time for these reporting companies to 
understand and comply with the requirements of the Reporting Rule as 
well as greater opportunities for FinCEN to efficiently respond to 
questions and address problems that reporting companies may have in 
complying. FinCEN invites comment on whether the proposed rule may 
provide for other benefits to reporting companies, their service 
providers, or other stakeholders. FinCEN also solicits comments on 
whether any aspects of this proposed rule would result in cost or 
burden, or whether the proposed rule would affect the estimate of the 
cost, burden, and impact of the Reporting Rule in the Reporting Rule's 
RIA.

Proposed Regulatory Text

List of Subjects in 31 CFR Part 1010

    Administrative practice and procedure, Aliens, Authority 
delegations (Government agencies), Banks and banking, Brokers, Business 
and industry, Citizenship and naturalization, Commodity futures, Crime, 
Currency, Electronic filing, Federal savings associations, Federal-
States relations, Foreign persons, Holding companies, Indians, Indian--
law, Indians--tribal government, Insurance companies, Investigations, 
Investment advisors, Investment companies, Law enforcement, Penalties, 
Reporting and recordkeeping requirements, Securities, Small business, 
Terrorism, Time.

    For the reasons set forth in SUPPLEMENTARY INFORMATION, FinCEN 
proposes to amend part 1010 of chapter X of title 31 of the Code of 
Federal Regulations, as amended September 30, 2022, at 87 FR 59498, 
effective January 1, 2024, as follows:

PART 1010--GENERAL PROVISIONS

0
1. The authority citation for part 1010 continues to read as follows:

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 
and 5316-5336; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307; 
sec. 2006, Pub. L. 114-41, 129 Stat. 458-459; sec. 701, Pub. L. 114-
74, 129 Stat. 599.

0
2. In Sec.  1010.380, revise (a)(1)(i)-(ii) to read as follows:


Sec.  1010.380  Reports of beneficial ownership information.

    (a) Reports required; timing of reports--
    (1) Initial report. Each reporting company shall file an initial 
report in the form and manner specified in paragraph (b) of this 
section as follows:
    (i) (A) Any domestic reporting company created on or after January 
1, 2024, and before January 1, 2025, shall file a report within 90 
calendar days of the earlier of the date on which it receives actual 
notice that its creation has become effective or the date on which a 
secretary of state or similar office first provides public notice, such 
as through a publicly accessible registry, that the domestic reporting 
company has been created.
    (B) Any domestic reporting company created on or after January 1, 
2025, shall file a report within 30 calendar days of the earlier of the 
date on which it receives actual notice that its creation has become 
effective or the date on which a secretary of state or similar office 
first provides public notice, such as through a publicly accessible 
registry, that the domestic reporting company has been created.
    (ii) (A) Any entity that becomes a foreign reporting company on or 
after January 1, 2024, and before January 1, 2025, shall file a report 
within 90 calendar days of the earlier of the date on which it receives 
actual notice that it has been registered to do business or the date on 
which a secretary of state or similar office first provides public 
notice, such as through a publicly accessible registry, that the 
foreign reporting company has been registered to do business.
    (B) Any entity that becomes a foreign reporting company on or after 
January 1, 2025, shall file a report within 30 calendar days of the 
earlier of the date on which it receives actual notice that it has been 
registered to do business or the date on which a secretary of state or 
similar office first provides public notice, such as through a publicly 
accessible registry, that the foreign reporting company has been 
registered to do business.

Andrea M. Gacki,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2023-21226 Filed 9-27-23; 8:45 am]
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