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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules
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report with FinCEN. Domestic reporting companies created, or foreign reporting companies registered to do business in the U.S. for the first time, on or after the effective date of the final regulations would be required to file their initial report with FinCEN within 14 calendar days of the date on which they are created or registered, respectively. If there is a change in the information previously reported to FinCEN under these regulations, reporting companies would have 30 calendar days to file an updated report. Finally, if a reporting company filed information that was inaccurate at the time of filing, the reporting company would have to file a corrected report within 14 calendar days of the date it knew, or should have known, that the information was inaccurate.
The proposed regulations also describe the type of information that a reporting company is required to file.
First, the reporting company would have to identify itself. The proposed regulations describe the information that a reporting company must submit to FinCEN about: 1 The reporting company, and 2 each beneficial owner and company applicant. This includes, for example, the name and address of each beneficial owner and company applicant, among other things. In lieu of providing specific information about an individual, the reporting company may provide a unique identifier issued by FinCEN called a FinCEN identifier. The proposed regulations describe how to obtain a FinCEN identifier and when it may be used. The proposed regulations also describe highly useful information that reporting companies are encouraged, but not required, to provide. This additional information would support efforts by government authorities and financial institutions to prevent money laundering, terrorist financing, and other illicit activities such as tax evasion.
The CTA provides that it is unlawful for any person to willfully provide, or attempt to provide, false or fraudulent BOI to FinCEN, or to willfully fail to report complete or updated BOI to FinCEN. The proposed regulations describe persons that are subject to this provision and what acts or failures to act trigger a violation.
II. Scope of the NPRM
In addition to the reporting requirements addressed by this proposed rule, Section 6403 contains other requirements. Section 6403
requires FinCEN to maintain the information that it collects under the CTA in a confidential, secure, and nonpublic database. It further authorizes
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FinCEN to disclose the information to certain government agencies, domestic and foreign, for certain purposes specified in the CTA; and to financial institutions to assist them in meeting their customer due diligence requirements. All disclosures of information submitted pursuant to Section 6403 are subject to appropriate protocols to protect the security and confidentiality of the BOI. FinCEN is required to establish such protocols by rulemaking.
Section 6403 also requires that FinCEN revise its current regulation concerning customer due diligence CDD requirements for financial institutions at 31 CFR 1010.230 the CDD Rule. The current CDD Rule requires certain financial institutions to identify and verify the beneficial owners of legal entity customers when those customers open new accounts as part of those financial institutions customer due diligence programs.3
FinCEN intends to issue three sets of rulemakings to implement the requirements of Section 6403: A
rulemaking to implement the beneficial ownership information reporting requirements, a second to implement the statutes protocols for access to and disclosure of beneficial ownership information, and a third to revise the existing CDD Rule, consistent with the requirements of section 6403d of the CTA. In this proposed rule, however, FinCEN seeks comments only on the firstthe proposed regulations that would implement the reporting requirements of Section 6403. FinCEN
intends to issue proposed regulations that would implement the other aspects of section 6403 of the CTA in the future and will solicit public comments on those proposed rules through publication in the Federal Register.
While developing the final BOI
reporting regulations, the BOI access regulations, and the revisions to the current CDD Rule, FinCEN continues to evaluate options for verification of information submitted in BOI reports.4
3 See 31 CFR 1010.230. See also Final Rule:
Customer Due Diligence Requirements for Financial Institutions, 81 FR 29398 May 11, 2016
promulgating same.
4 In addition, pursuant to section 6502b1C
and D of the NDAA, the Secretary, in consultation with the Attorney General, will conduct a study no later than two years after the effective date of the BOI reporting final rule, to evaluate the costs associated with imposing any new verification requirements on FinCEN and the resources necessary to implement any such changes.

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III. Background A. Beneficial Ownership of Entities i. Overview and Current Status of BOI
Reporting in the United States Legal entities such as corporations, limited liability companies, partnerships, and trusts play an essential and legitimate role in the U.S.
and global economies. They are used to engage in lawful business activity, raise capital, limit personal liability, generate investments, and can be engines for innovation and economic growth, among other activities. They can also be used to engage in illicit activity and launder its proceeds, and enable those who threaten U.S. national security to access and transact in the U.S. economy.
Because of the ease of setting up legal entities and the minimal amount of information required to do so in most U.S. states,5 combined with the investment opportunities the United States presents, the United States continues to be a popular jurisdiction for legal entity formation. The number of legal entities currently operating in the United States is difficult to estimate with certainty, but Congress found that more than two million corporations and limited liability companies are being formed under the laws of the states each year.6 According to Global Financial Integrity, more public and anonymous corporations are formed in the United States than in any other jurisdiction.7
The number of legal entities already in existence in the United States that may need to report information on themselves, their beneficial owners, and their formation or registration agents pursuant to the CTA is very likely in the tens of millions.8
5 For simplicity, in the remainder of this NPRM
preamble the term state means the 50 states and the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, the United States Virgin Islands.
6 CTA, Section 64021. FinCENs analysis estimating such entities is included in the regulatory analysis in Section VI of this NPRM.
7 Global Financial Integrity, The Library Card Project: The Ease of Forming Anonymous Companies in the United States, March 2019
GFI Report, p. 1, available at https
secureservercdn.net/50.62.198.97/34n.8bd.
myftpupload.com/wp-content/uploads/2019/03/
GFI-Library-Card-Project.pdf?time=1635277837. In 2011, the World Bank assessed that 10 times more legal entities were formed in the United States than in all 41 tax haven jurisdictions combined. See The World Bank, UNODC, Stolen Asset Recovery Initiative, The Puppet Masters: How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It 2011, p. 93, available at https star.worldbank.org/sites/star/files/puppet mastersv1.pdf.
8 In the regulatory analysis in Section VI of this NPRM, FinCEN estimates that there will be at least
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