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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules TABLE 7TOTAL COSTS OVER TEN
YEARSContinued Year Year Year Year Year Year Year
Total cost
5
6
7
8
9
10

364,577,205.05
364,577,205.05
364,577,205.05
364,577,205.05
364,577,205.05
364,577,205.05

In addition, FinCEN calculated the net present value of cost for a 10-year horizon at discount rates of seven and three percent,309 totaling approximately $3.4 billion and $3.98 billion, respectively see Table 8 below for exact figures. FinCEN calculated the cost over a ten-year horizon to capture the immediate impact, but expects that from Year 2 onwards the annual aggregate costs would be the same in each subsequent year.

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v. Alternative Scenario Analyses FinCEN considered alternatives while shaping the specific reporting requirements of the rule, including: 1
The length of the initial reporting period; and 2 the length of time to file an updated report. The analyses of these alternatives rely upon the analysis used thus far in the PRA cost estimate. Each alternative is considered fully below.
In the first alternative, FinCEN
considered whether to lengthen the timeframe in which initial reports may be submitted by companies that are in existence when the eventual final rule comes into effect. The CTA states that existing companies shall submit a BOI
report to FinCEN in a timely manner, and not later than 2 years after the effective date of the regulations addressed by this proposed rule.310
FinCEN currently proposes that existing companies submit a BOI report one year after the effective date, which is not later than 2 years; however, given that the CTA permits FinCEN to select up to a two-year period for initial reports of companies that already exist when the final rule comes into effect, FinCEN
compared the cost to the public for these two scenarios.
FinCEN assumed that if the reporting period was two years, half of the existing reporting companies would file 309 These discount rates were applied based on OMB guidance in Circular A4. See Office of Management and Budget, Circular A4 September 17, 2003, available at https obamawhitehouse.
archives.gov/omb/circulars_a004_a-4/.
310 See 31 U.S.C. 5336b1B.

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their initial BOI report in Year 1 and the other half would file in Year 2. The same logic was applied to individuals applying for FinCEN identifiers and submitting foreign pooled investment vehicle reports: Half of the initial applications or reports would be filed in Year 1, and the other half in Year 2.
FinCEN also assumed that updated reports would increase at an incremental rate throughout the twoyear period, and therefore calculated the number of updated reports by extending the methodology described above to a 24-month timeframe rather than a 12month timeframe. This comparison shows that the cost of the rule is approximately $637 million less in Year 1 with this change, and approximately $358 million more in Year 2, but then is the same in following years. This also decreased the ten-year horizon net present value by approximately $281
million at a three percent discount rate or $283 million at a seven percent discount rate. However, the benefits of a one-year reporting period would outweigh the increase in cost during Year 1 of the rule. The public would bear the cost of initial report filings regardless and FinCEN has sought to maximize the usefulness of the database to law enforcement by obtaining BOI for existing entities as soon as possible.
In the second alternative, FinCEN
considered whether to lengthen the timeframe for updated reports from 30
days to one year. The CTA states that updated reports shall be filed not later than 1 year after the date on which there is a change. 311 FinCEN currently proposes that updates be submitted 30
days after the change date, which is not later than 1 year; however, given that the CTA permits FinCEN to select up to a one-year timeframe, FinCEN
compared the cost to the public of these two scenarios. FinCEN assumed that permitting updates to be reported within one year would result in updates being bundled, meaning that a reporting company could submit one updated report to account for multiple updates, as opposed to reporting each update singularly as would likely be the case under the 30-day reporting requirement. FinCEN therefore assumed that there would be approximately half as many updated reports overall if the timeframe is lengthened to one year.
FinCEN also assumed that because more information may be reported on a 311 See
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bundled report, the burden of filing an update would increase. FinCEN
increased the estimated burden for an updated BOI report to be 50 minutes, rather than the 30 minutes estimate for 30-day updated reports.312 FinCEN
estimated that increasing the timeframe for updated reports results in a net present value cost decrease by approximately $238 million at a seven percent discount rate or $293 million at a three percent discount rate. However, the benefits of having information updated on a monthly basis, which would make the database current and accurate and by extension highly useful, outweigh these costs. As noted in Section IV above, allowing reporting companies to report updates on an annual basis could cause a significant degradation in accuracy and usefulness of the BOI. FinCEN also believes that a 30-calendar-day deadline is necessary to limit the possible abuse of shelf companiesi.e., entities formed as generic corporations without assets and then effectively assigned to new owners.
The longer updates are delayed, the longer a shelf company can be off the shelf without notice to law enforcement of the companys new beneficial owners, and without any notice to financial institutions that they should scrutinize transactions involving the company from the perspective of its new beneficial owners.
The following table provides the detailed cost estimates for the proposed rule, as well as the two alternatives discussed. Please note that NPV refers to the net present value of cost for a tenyear time horizon, which is calculated at two different discount rates.
312 There may also be a burden decrease to reporting companies that FinCEN does not separately account for in its estimate: If the timeframe for updated reports is increased to one year, reporting companies that choose to regularly survey their beneficial owners for information changes would not have to reach out on a monthly basis to request any updates from beneficial owners.
FinCEN has not accounted for this burden other than in the time required to collect information for an updated report, but welcomes comment on its significance, and the extent it may vary depending based on the permissible update period selected.
FinCENs cost estimates for updated reports also does not currently account for decrease in cost that may be associated with increased use of FinCEN
identifiers. If individuals request FinCEN
identifiers, reporting companies would not be required to update the individuals information on the BOI form; individuals with FinCEN identifiers would update their own information with FinCEN
directly, consistent with the requirements of the proposed rule.

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