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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules
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us all at risk. 67 Senators Sheldon Whitehouse, Charles Grassley, Ron Wyden, and Marco Rubio, who were cosponsors of the CTA and its predecessor legislation in the Senate, commented on the ANPRM that the CTA marked the culmination of a years-long effort in Congress to combat money laundering, international corruption, and kleptocracy by requiring certain companies to disclose their beneficial owners to law enforcement, national security officials, and financial institutions with customer due diligence obligations. 68

standards to enhance beneficial ownership transparency across all jurisdictions. U.S. efforts to collect BOI
are part of this growing international consensus by jurisdictions to enhance beneficial ownership transparency, and will be reinforced by similar efforts by foreign jurisdictions.
The current lack of a centralized U.S.
BOI reporting requirement and database makes the United States a jurisdiction of choice to establish shell companies that hide the ultimate beneficiaries. This makes it easier for bad actors to exploit these companies for the placement, laundering, and investment of the v. The United States Corporate proceeds of crime. Global financial Transparency Measures Within the centers such as the United States are Broader International Framework particularly exposed to transnational The laundering of illicit proceeds illicit finance threats, as they tend to frequently entails cross-border have characteristicssuch as extensive transactions involving jurisdictions with links to the international financial weak AML/CFT compliance system, sophisticated financial sectors, frameworks, as these jurisdictions may and robust institutionsthat make them present more ready options for appealing destinations for the proceeds criminals to place, launder, or store the of illicit transnational activity. Corrupt proceeds of crime. For over a decade, foreign officials, sanctions evaders, and through the former Group of Eight G8, narco-traffickers, among others, exploit Group of Twenty G20,69 FATF, and the the current gap in the U.S. BOI reporting Egmont Group,70 the global community regime to park their ill-gotten gains in has worked to establish a set of mutual a stable jurisdiction, thereby exposing the United States to serious national 67 Senator Sherrod Brown, National Defense security threats. For example, the Authorization Act, Congressional Record 166:208
Department of Justice indicted the December 9, 2020, p. S7311, available at https
alleged heads of the Los Zetas Mexican www.govinfo.gov/content/pkg/CREC-2020-12-09/
drug cartel for their roles in using the pdf/CREC-2020-12-09.pdf.
68 Senators Sheldon Whitehouse, Chuck Grassley, race horse industry and shell companies Ron Wyden, and Marco Rubio, Letter to the to launder millions of dollars in drug Financial Crimes Enforcement Network, May 5, proceeds.71 The FBIs DAntuono noted 2021, available at https www.rubio.senate.gov/
that the wide use of shell companies, in public/_cache/files/ceb65708-7973-4b66-8bd4c8254509a6f3/
both the United States and Mexico, 13D55FBEE293CAAF52B7317C5CA7E44C.senatorsmade it challenging for banks and cta-comment-letter-05.04.2021.pdf.
investigators to associate the drug cartel 69 See, e.g., United States G8 Action Plan for with horses and bank accounts. If not Transparency of Company Ownership and Control June 2013, https obamawhitehouse.archives.gov/ for solid witness testimony and the-press-office/2013/06/18/united-states-g-8extremely diligent forensic accounting, action-plan-transparency-company-ownership-andit would have been difficult to prove the control; G8 Lough Erne Declaration July 2013, case, he noted.72
https www.gov.uk/government/publications/g8lough-erne-declaration; G20 High Level Principles As noted previously, the United on Beneficial Ownership 2014, https
States lack of a centralized BOI
www.g20.utoronto.ca/2014/g20_high-level_
principles_beneficial_ownership_transparency.pdf ; reporting requirement constitutes a weak link in the integrity of the global United States Action Plan to Implement the G20
High Level Principles on Beneficial Ownership Oct. financial system. In the CTA, Congress 2015, https obamawhitehouse.archives.gov/blog/
explained that the statute is necessary to 2015/10/16/us-action-plan-implement-g-20-highbring the United States into level-principles-beneficial-ownership.
70 FATF has also collaborated with the Egmont compliance with international AML/
Group of Financial Intelligence Units on a study CFT standards. 73 Many countries, that identifies key techniques used to conceal including the United Kingdom and all beneficial ownership and identifies issues for member states of the European Union, consideration that include coordinated national have incorporated elements derived action to limit the misuse of legal entities. FATFEgmont Group, Concealment of Beneficial from these standards into their domestic Ownership 2018, https egmontgroup.org/sites/
default/files/filedepot/Concealment_of_BO/FATFEgmont-Concealment-beneficial-ownership.pdf. The Egmont Group is a body of 166 Financial Intelligence Units FIUs; FinCEN is the FIU of the United States and a founding member of the Egmont Group. The Egmont Group provides a platform for the secure exchange of expertise and financial intelligence amongst FIUs to combat money laundering and terrorist financing.

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71 FBI, Testimony of Steven M. DAntuono, Section Chief, Criminal Investigative Division, Combatting Illicit Financing by Anonymous Shell Companies May 21, 2019, available at https
www.fbi.gov/news/testimony/combating-illicitfinancing-by-anonymous-shell-companies.
72 Id.
73 CTA, Section 64025E.

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legal or regulatory frameworks. At the same time, FATF mutual evaluations show that jurisdictions, including the United States, still have work to do to meet the standards for beneficial ownership transparency. Establishing the requirements to report BOI to a centralized database at FinCEN is another step in Treasurys decades-long efforts to strengthen the U.S. and global financial systems and to combat money laundering and corruption.
B. The CTA
The CTA added a new section, 31
U.S.C. 5336, to the BSA to address the broader objectives of enhancing beneficial ownership transparency while minimizing the burden on the regulated community.
In brief, 31 U.S.C. 5336 requires certain types of domestic and foreign entities, called reporting companies, to submit specified BOI to FinCEN.
FinCEN is authorized to share this BOI
with certain Government agencies, financial institutions, and regulators, subject to appropriate protocols.74 The requirement for reporting companies to submit BOI takes effect on the effective date of the regulations prescribed by the Secretary of the Treasury under 31
U.S.C. 5336. 75 Reporting companies formed or registered after the effective date will need to submit the requisite BOI to FinCEN at the time of formation, while preexisting reporting companies will have a specified period to comply and report.76
The CTA reporting requirements target generally smaller, more lightly regulated entities that may not be subject to any other BOI reporting requirements. In contrast, the CTA
exempts certain more heavily regulated entities from its reporting requirements, including to avoid imposing duplicative requirements.
The provision at 31 U.S.C. 5336
requires reporting companies to submit to FinCEN, for each beneficial owner and company applicant, the individuals full legal name, date of birth, current residential or business street address, and either a unique identifying number from an acceptable identification document e.g., a passport or a FinCEN
identifierfour readily accessible pieces of information that should not be unduly burdensome for individuals to produce, or for reporting companies to collect and submit to FinCEN.77 A
FinCEN identifier is a unique identifying number that FinCEN will 74 See
generally 31 U.S.C. 5336b, c.
U.S.C. 5336b5.
76 See 31 U.S.C. 5336b1B, C.
77 See 31 U.S.C. 5336b2.
75 31

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