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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules institutions; limited liability companies owned by spouses solely to hold real property; certain Tribal entities; certain commodity pools, additional pooled investment vehicles, additional investment advisors, and family offices;
companies with less than a defined capitalization or revenue threshold;
well-established businesses; and entities owned by U.S. persons with significant asset holdings held in custody at regulated financial institutions. Many of these commenters, however, did not explain why they believe their proposed additions would meet the statutory standard. Other commenters from civil society organizations recommended construing existing exemptions narrowly and not introducing new exemptions at this time. While the proposed rule would not create additional exemptions, FinCEN will continue to consider whether any additional exemptions would be appropriate. FinCEN welcomes comments on this approach and whether to adopt exemptions beyond those specifically required by statute.
FinCEN also welcomes comments on how, when considering a new exemption, the agency should make the statutorily required determinations that collecting beneficial ownership information for a potentially exempt entity or class of entities would not serve the public interest and also would not be highly useful in national security, intelligence, and law enforcement agency efforts to detect, prevent, or prosecute money laundering, the financing of terrorism, proliferation finance, serious tax fraud, or other crimes.
Many commenters also encouraged FinCEN to require exempt entities to file a report in order to claim an exemption.
Such a requirement may make FinCENs BOI database significantly more useful by making it clear which entities did not file BOI because they intentionally claimed exemptions and which simply failed to satisfy the reporting obligation.
Many other commenters opposed such a requirement, arguing it was inconsistent with both the statutory language of the CTA and the CTAs legislative history, and likely to be highly burdensome.
One commenter suggested that a reasonable alternative to any affirmative exemption filing requirement would be a requirement to provide an exemption certification to FinCEN only upon request from the bureau or another applicable governmental authority.
However, the commenter did not identify the statutory authority that would permit FinCEN to impose such a requirement. FinCEN invites comment
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on any applicable statutory authority. At least one commenter noted that FinCEN
should permit exempt entities to voluntarily file exemption certifications.
FinCEN invites comment on the appropriateness of inviting such voluntary filings.
E. Timing of Reports; Update or Correction of Reports i. Timing of Initial Reports The CTA describes the filing deadlines for both reporting companies in existence prior to the effective date of the regulations and for reporting companies formed or registered after the effective date. The provision at 31
U.S.C. 5336b1B provides that any reporting company that has been formed or registered before the effective date of the reporting regulations shall, in a timely manner, and not later than two years after the effective date of the reporting regulations, submit to FinCEN
a report that contains the information described in 31 U.S.C. 5336b2.
Separately, 31 U.S.C. 5336b1C
provides that in accordance with regulations prescribed by the Secretary, any reporting company that has been formed or registered after the effective date of the regulations shall, at the time of formation or registration, submit to FinCEN a report that contains the information described in 31 U.S.C.
5336b2.
Thus, the CTA requires FinCEN to prescribe regulations for exactly when reporting companies must file. The proposed regulations elaborate and clarify these filing deadlines in a manner that seeks to both minimize burdens on filers and to advance the objective of providing a timely and accurate database of highly useful information for authorized users. For newly formed or registered companies, proposed 31 CFR 1010.380a1i specifies that a domestic reporting company formed on or after the effective date of the regulation shall file a report within 14 calendar days of the date it was formed as specified by a secretary of state or similar office. Proposed 31
CFR 1010.380a1ii specifies that any entity that becomes a foreign reporting company on or after the effective date of the regulation shall file a report within 14 calendar days of the date it first became a foreign reporting company.
Both proposed rules are intended to minimize the compliance burden by providing a bright-line rule as well as a reasonable period of time for newly formed or registered reporting companies to collect and report information from their beneficial owners and company applicants. At the
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same time, FinCEN seeks to compile a timely and highly useful database of beneficial ownership information available to law enforcement and other authorized users. FinCEN believes that allowing 14 days for such initial reporting to FinCEN will provide newly formed or registered reporting companies reasonable time to collect the information specified in proposed 31
CFR 1010.380b1 from their beneficial owners and company applicants and to enter the required information about the company, its beneficial owners, and its company applicants into a form provided by FinCEN. Because the entity will be newly formed or registered, FinCEN anticipates that much of the required information will be readily available to the reporting company, and that the burden on the reporting company to collect and provide this information within 14 calendar days will be minimal. FinCEN also believes that requiring initial reports to be filed relatively quickly will help make the BOI reporting process a natural part of the formation or registration process, furthering the CTAs objective to set a clear, Federal standard for incorporation practices. 146 However, based on comments received in response to the ANPRM, FinCEN is aware there may be special circumstances in which a 14calendar-day deadline to file an initial report is insufficient or impractical.147
FinCEN welcomes additional comments on whether the 14-day deadline for newly formed or registered reporting companies to file an initial report is reasonable, and on whether there are situations in which this time is likely to be insufficient and proposals to address such situations.
For entities formed or registered before the effective date of the regulations, the CTA requires filing of beneficial owner and company applicant information in a timely manner, but no later than two years after the effective date of the final regulations. Proposed 31 CFR
1010.380a1iii would require any domestic reporting company created before the effective date of the regulation and any entity that became a foreign reporting company before the effective date of the regulation to file a report not later than one year after the effective date of the regulation. This approach balances the need for effective outreach and notice to preexisting companies with the need to collect 146 CTA,
Section 64065A.
example, one commenter noted that it may take longer than 14 days for an entity to complete necessary registrations or approvals that would exclude the entity from the definition of a reporting company.
147 For
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