The Financial Crimes Enforcement Network (FinCEN) issued its final rule establishing beneficial ownership information reporting as required by the Corporate Transparency Act’s Beneficial Ownership information reporting provisions. The purpose of the rule is to better assist regulators and law enforcement with combating money laundering, terrorist financing, and other illicit financial crimes, by ending the formation of anonymous shell companies which are often used by bad actions for illicit purposes. The rule will require domestic and foreign businesses to report information about their beneficial owners to FinCEN. Beneficial owners are individuals with 25 percent or more interest in a company. The new rule goes into effect on January 1, 2024. Newly formed entities and existing legal entities will be required to report.
NAR has been supportive of pragmatic reforms, such as collection beneficial ownership information because it is a reasonable approach to address money laundering and illicit financial crimes and does not unduly burden small businesses. NAR will continue to review the rule, and provide updates regarding beneficial ownership, and broader anti-money laundering matters.