On April 1, 2021, the Financial Crimes Enforcement Network (FinCEN) issued an Advance Notice of Proposed Rulemaking (the "Notice") seeking public comment on a myriad of issues related to the implementation of a beneficial ownership information reporting system under the Corporate Transparency Act (the "Act").

As discussed in our previous article, The Corporate Transparency Act: Initial Observations and Considerations for Domestic and International Private Clients, the Act requires “reporting companies” to provide certain information on each of their “beneficial owners” and "applicants" to FinCEN. For each such individual, a reporting company must generally provide a full legal name, date of birth, current residential or business address, and a unique identifying number from a non-expired passport, personal information card, or driver’s license, or one issued by FinCen (the "FinCEN identifier").

Through the Notice, FinCEN seeks preliminary input from the public on various aspects of implementation of the Act, as part of its requirement to issue regulations by January 1, 2022, to implement the Act. In particular, the Notice requests a multitude of comments from the public on these general topics:

i. how to best implement and enforce the new reporting requirements and the provisions related to FinCEN’s maintenance and disclosure of information;
ii. the mechanics, procedures, and standards for reporting companies to submit the required information regarding their beneficial owners;
iii. the various definitions provided in the CTA (such as “reporting companies” and “beneficial owners”);
iv. the form and process of issuance of the FinCEN identifier; and
v. potential costs for small businesses and how to best minimize any such burdens.

One noteworthy request in the Notice is for comments on how "other similar entities" should be reported and what qualifications should factor into the definition of a reporting company. As we discussed in a previous article on the Act , the treatment of trusts under the Act is currently unclear. Of particular interest, the Notice asks whether a trust that is formed by a filing with a secretary of state should be included or excluded from the reporting requirements.

We will continue to monitor developments of the Act. Companies that may meet the Act's definition of a reporting company should begin to become familiar with the Act and its reporting requirements.