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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules
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FinCEN considered likely triggers for updated reports and the likelihood of these events, in order to estimate the number of updates. FinCEN assessed that the most likely causes for updates to reporting companies initial reports are: 1 Change in address of a beneficial owner or applicant; 2 death of a beneficial owner; or 3 a management decision resulting in a change in beneficial owner.250 In order to estimate the likelihood of these updates on a monthly basis, given that the proposed rule requires updates within 30 days, FinCEN approximated probabilities for these causes from other sources:
1. Change in address: According to the Census Bureaus Geographic Mobility data, 29,780,000 people one year or older moved from 20192020.251
This is approximately 8.9824695
percent of the 2020 U.S. population.252
Therefore, FinCEN assesses that 8.9824695 percent of beneficial owners may have a change in address within a year, resulting in an updated BOI report.
2. Death: FinCEN utilized data published in the Social Security Administrations 2019 Period Life Table 250 There may be other causes for updating BOI
reports, such as change of beneficial owner or applicant name, expiration of the provided identification number document, or change in the identifying information for the reporting company, such as address or name/DBA. However, FinCEN
assesses that these changes would occur at a relatively minor rate compared to the reasons described above. In particular, FinCEN understands that a renewed drivers license is likely to have the same identification number as the previously submitted expired document, and therefore is less likely to require an updated report. FinCEN
welcomes comments that address whether there are, and if so which, states that do not follow this convention. FinCEN also assumes that reports notifying FinCEN that a reporting company has become eligible for an exemption from the reporting requirement would be negligible burden and has not separately estimated it.
251 See U.S. Census Bureau, Table 1. General Mobility, by Race and Hispanic Origin and Region, and by Sex, Age, Relationship to Householder, Educational Attainment, Marital Status, Nativity, Tenure, and Poverty Status: 2019 to 2020United States, available at https www.census.gov/data/
tables/2020/demo/geographic-mobility/cps2020.html. The total movers, in thousands, is 29,780.
252 The U.S. population on July 1, 2020 was 331,534,662 according to the Census Bureau. See U.S. Census Bureau, U.S. and World Population Clock, available at https www.census.gov/
popclock/. The percentage was calculated by:
29,780,000/331,534,662 100 = 8.9824695.

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to estimate this probability.253 FinCEN
narrowed the range of ages to 3090 and calculated the median probability of death for males 0.011447 and females 0.00688. FinCEN then averaged these numbers, resulting in a 0.9164 percent probability of death within a year.
3. Management decision: Changes to beneficial ownership due to management decisions could encompass items such as a sale of an ownership interest or a change in substantial control the removal, change, or addition of a beneficial owner with substantial control. FinCEN is not aware of a current data source that could accurately estimate such updates to BOI, though FinCEN invites comment on an appropriate way to estimate these numbers. FinCEN is assuming that 10
percent of beneficial owners may change within a year due to management decisions.
Totaling these estimated probabilities, there is an approximately 20 percent probability of a change for a given beneficial owner resulting in an updated BOI filing within a year.254 FinCEN
divided this by 12 to find the monthly probability of an update: 1.6582 percent.
Given that each BOI report may contain multiple beneficial owners, each of which could contribute to a change resulting in an updated report, FinCEN reviewed data published by the UK in a 2019 study on their BOI
reporting requirements.255 The UK
requirements define beneficial owners People with Significant Control, or PSC as those that directly or indirectly hold more than 25 percent of shares or 253 See Social Security Administration, Actuarial Life Table, Period Life Table, 2019, available at https www.ssa.gov/oact/STATS/table4c6.html.
254 As a point of comparison, the UK found that 10 percent of businesses reported a change in beneficial ownership information following an initial report. United Kingdom Department for Business, Energy & Industrial Strategy, Review of the Implementation of the PSC Register, March 2019, p. 16, available at https assets.publishing.
service.gov.uk/government/uploads/system/
uploads/attachment_data/file/822823/reviewimplementation-psc-register.pdf.
255 The UK study used a mixed-method research approach, which consisted of a quantitative survey with 500 businesses and indepth qualitative interviews with 30 stakeholder organizations and 2 members of staff from Companies House. United Kingdom Department for Business, Energy & Industrial Strategy, Review of the implementation of the PSC Register, March 2019, p. 4, available at https assets.publishing.
service.gov.uk/government/uploads/system/
uploads/attachment_data/file/822823/reviewimplementation-psc-register.pdf.

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voting rights in a company, has the right to appoint or remove the majority of the board of directors, or otherwise exercises significant influence or control.256 The UK study reported the following distribution of the number of reported beneficial owners per report: 0
8 percent of reports; 1 43 percent; 2
37 percent; 3 9 percent; 4 2 percent;
5 to 10 2 percent; and dont know 1
percent.257
In order to use this distribution for its estimation purposes, FinCEN is modifying the percentage of reports with one beneficial owner to 50 percent.
This is to account for the fact that the beneficial ownership requirements proposed herein would not include an option for zero reported beneficial owners. Increasing the estimate of the percentage of reports with one beneficial owner is reasonable because FinCEN assumes that many of the reporting companies would be small businesses with simple ownership structures.258 FinCEN is adding 7
percent to the distribution for one beneficial owner rather than 9 percent the total of the 0 beneficial owners and dont know responses in the UKs study in order to ensure that the distribution totals 1. Additionally, FinCEN averaged 5, 6, 7, 8, 9, 10 to calculate 7.5 beneficial owners for the distribution category labeled in the UK
study as 5 to 10 beneficial owners, although this is likely a high estimate of the true number in the UK data given the otherwise left-skewed nature of the distribution based on the available data.
Please see the following table:

TABLE 3ESTIMATED DISTRIBUTION
OF BENEFICIAL OWNERS PER REPORT
Number of beneficial owners per report 1
2
3
4
7.5
256 Id.,
Estimated distribution 0.50
0.37
0.09
0.02
0.02

p. 8.
p. 14.
258 For purposes of the IRFA above, FinCEN
assumes that all reporting companies will be small entities. However, there may be reporting companies that are small, but have complex ownership structures. Therefore, FinCEN assumes here that many reporting companies will be small with a simple ownership structure.
257 Id.,
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