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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules 5336b2C. Under proposed 31 CFR
1010.380b3iii, a foreign legal entity that is formed under the laws of a foreign country, and that would be a reporting company but for the pooled investment vehicle exemption in 31
CFR 1010.380c2xviii, must report to FinCEN the BOI of the individual who exercises substantial control over the legal entity.
Proposed 31 CFR 1010.380b3iv sets forth a special reporting rule for situations where a reporting company is created before the effective date of the regulations and the company applicant has died before the reporting obligation is effective. The proposed rule elaborates at 31 CFR 1010.380e that a company applicant is the individual who files, including by directing or controlling the filing, the document that created the reporting company. This may present substantial challenges for a longstanding company e.g., one that was formed a century ago. In specifying the information to be reported about beneficial owners and applicants, the CTA appears to presume that such individuals are not deceased, as it requires a current address and a number from a nonexpired identification document.104 Thus, for deceased individuals, Congress does not appear to have spoken directly to the information required to be reported to identify such individuals, and FinCEN must prescribe procedures and standards governing any report for such individuals.105
To minimize burdens in this unique situation, proposed 31 CFR
1010.380b3iv would allow a reporting company formed or registered before the effective date of the regulations, and whose company applicant died before the reporting company had an obligation to obtain identifying information from a company applicant, to report that fact along with whatever identifying information the reporting company actually knows about the company applicant. FinCEN
believes that this tailored approach balances stakeholders need for information on company applicants with the challenges older reporting companies may face. FinCEN welcomes comments on this special rule or any other special rules that may be required to alleviate the burden of company applicant reporting, and would encourage commenters to include an explanation of why they believe such further proposed special rules are consistent with the CTA.
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FinCEN does not propose to apply the same rule to deceased beneficial owners because, as the statute makes clear and as the proposed rule elaborates at proposed 31 CFR 1010.380d, the requirement to report beneficial owners pertains to those who are the current beneficial owners of the reporting company. While a company applicant will remain the same for all time after the entity is created, an individual will cease to be a beneficial owner upon death. As a result, no beneficial owners will be deceased at the time a company must report them. A reporting company thus will not face the same burdens in reporting information about current beneficial owners as it may face in reporting information about deceased company applicants.
iv. FinCEN Identifier; Other Matters Proposed 31 CFR 1010.380b4
would specify the contents of corrected and updated reports, making clear that such reports filed in the time and manner specified in 31 CFR 1010.380a must contain the corrected or updated information, and in the case of newly exempt entities, shall contain a notification that the exempt entity is no longer a reporting company. These updated and corrected reports are explained in 31 CFR 1010.380a2 and 3.
Proposed 31 CFR 1010.380b5 sets forth rules that relate to obtaining and using a FinCEN identifier, reflecting requirements that are found in several different parts of 31 U.S.C. 5336.
Consistent with 31 U.S.C. 5336b3A, an individual may obtain a FinCEN
identifier by providing FinCEN with the information that the individual would otherwise have to provide to a reporting company if the individual were a beneficial owner or applicant of the reporting company; an entity can obtain a FinCEN identifier from FinCEN when it submits a filing as a reporting company or any time thereafter.106 This means that an individual or legal entity must still disclose information to FinCEN, but once an individual or legal entity has a FinCEN identifier, the individual or legal entity can provide the identifier to a reporting company in lieu of the personal details required under paragraph b1. For instance, an individual can provide his or her FinCEN identifier to the reporting company, and the reporting company can provide the FinCEN identifier to FinCEN in lieu of any information the 106 The statute provides that only entities that report their beneficial ownership information to FinCEN are eligible to receive FinCEN identifiers.
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reporting company would otherwise have to report about the individual under paragraph b1. Similarly, an entity can provide the FinCEN identifier to the reporting company, and the reporting company can provide the FinCEN identifier to FinCEN in lieu of any information the reporting company would otherwise have to report about that entitys beneficial owners if they qualified as beneficial owners of the reporting company through their interests in the entity. In such circumstances, the underlying information associated with a FinCEN
identifier would still be available to FinCEN.
B. Beneficial Owners The CTA defines a beneficial owner, with respect to a reporting company, as any individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwisei exercises substantial control over the entity; or ii owns or controls not less than 25% of the ownership interests of the entity. 107 The statute, however, does not define substantial control or ownership interests. FinCEN
proposes to clarify these terms in the rule so that a reporting company has sufficient guidance to identify and report its beneficial owners.
Consistent with the CTA, the proposed rule would require a reporting company to identify any individual who satisfies either of these two components.
Based on the breadth of the substantial control component, FinCEN expects that a reporting company would identify at least one beneficial owner under that component regardless of whether 1
any individual satisfies the ownership component, or 2 exclusions to the definition of beneficial owner apply.
FinCEN is interested in comments addressing whether that expectation is reasonable, under what circumstances a reporting company may not have at least one reportable beneficial owner, and how to address such circumstances, if they exist.
i. Substantial Control Proposed 31 CFR 1010.380d1 sets forth three specific indicators of substantial control: 1 Service as a senior officer of a reporting company;
2 authority over the appointment or removal of any senior officer or dominant majority of the board of directors or similar body of a reporting company; and 3 direction, determination, or decision of, or substantial influence over, important 107 31

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