Notice is First of Three Sets of Regulations for the CTA

Yesterday, the Financial Crimes Enforcement Network (“FinCEN”) issued a Notice of Proposed Rulemaking (“NPRM”) regarding the beneficial ownership reporting requirements of the Corporate Transparency Act (“CTA”), which requires defined entities – including foreign entities with a presence in the U.S. – to report their beneficial owners to FinCEN upon their creation/incorporation.  The CTA is a key piece of legislation designed to enhance transparency and combat the misuse of so-called “shell companies.”

The press release is here; the actual NPRM is here; and a summary “fact sheet” issued by FinCEN regarding the NPRM is here.  We have blogged on the CTA and these impending regulations many times (here, here, here, here and here).

The federal register version of the NPRM is 55 pages long and very detailed.  Accordingly, this blog post serves only to announce the issuance of the NPRM — we will follow up in the next few days with a detailed analysis of these long-anticipated proposed regulations.  The complexity of the CTA is highlighted by the fact that this NPRM only addresses beneficial ownership reporting.  FinCEN has stated that it will engage in two additional rulemakings under the CTA to (1) establish rules for who may access beneficial ownership information, for what purposes, and what safeguards will be required to protect such information; and (2) revise and conform the customer due diligence rule for financial institutions following the promulgation of the final version of this NPRM.

FinCEN’s summary fact sheet, linked above, is entitled “Key Elements of the Proposed Beneficial Ownership Information Reporting Regulation.”  It observes that the NPRM describes who must file a report on beneficial ownership, what information must be reported, and when a report is due. It further observes that the proposed rule “would require reporting companies to file reports with FinCEN that identify two categories of individuals: (1) the beneficial owners of the entity; and (2) individuals who have filed an application with specified governmental or tribal authorities to form the entity or register it to do business.”

Please stay tuned.

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