Enacted in 2021, the Corporate Transparency Act (CTA) established uniform beneficial ownership information (BOI) reporting requirements for certain corporations, limited liability companies and other similar entities created or registered to do business in the United States that took effect as of Jan. 1, 2024.

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, has been tasked with collecting BOI from reporting entities, and securely disclosing it to authorized government authorities and financial institutions on a publicly accessible registry. Individuals who directly or indirectly own or control a reporting entity need to report information, such as full legal names, dates of birth and addresses.

At the very end of 2023, the Treasury Department issued a final rule that outlines precisely which entities will be able to access the BOI registry. Some observers were surprised by the broad scope of entities included.

Final Rule

Along with banks, money-services businesses (MSBs), casinos and other non-bank financial institutions obligated to detect and prevent money laundering will be eligible to access the registry.

The final rule also omits a proposed requirement that financial institutions permit access only to personnel located within the United States. The proposed access rule, issued in December 2022, envisioned granting access to entities such as banks, broker-dealers, futures commission merchants and others required to comply with FinCEN’s customer due diligence (CDD) rule, which was established in 2018.

In addition, the final rule broadens how eligible financial institutions can use the BOI posted in the registry. That is, they’ll be able to use it for a wide range of purposes related to combating money laundering and complying with sanctions.

“This change will allow financial institutions to use [BOI] obtained from FinCEN for purposes that go beyond compliance with FinCEN’s CDD [customer due diligence] rule,” said Andrea Gacki, FinCEN director, during an online media event. “[This includes] maintaining their anti–money–laundering (AML) programs, sanctions screening, and meeting suspicious activity report filing and enhanced due diligence requirements.”

Because the final rule permits registry access for broader AML applications, it also grants access to a wider array of entities that are required to comply with the Bank Secrecy Act. Per the language of the final rule, FinCEN is authorized:

… to disclose BOI to a broader range of financial institutions consistent with the revised approach taken with respect to the meaning of ‘customer due diligence requirements under applicable law.’ … Accordingly, MSBs and other financial institutions with AML program requirements, such as casinos … would be eligible under the final rule to access the database, subject to appropriate security and confidentiality protocols.

However, FinCEN has discretion regarding the scope and timing of access by financial institutions. FinCEN will allow access to the registry “in phases,” beginning with a pilot program granting access to a handful of key federal agency users starting in 2024. As of this writing, there’s no timeline for the various eligible financial institutions’ access.

Comment Letters

During the aforementioned online media event, Gacki explained that FinCEN’s decision to allow a broader scope of financial institutions access to the BOI registry for purposes other than the CDD rule was in response to concerns raised in 80 comment letters from members of Congress, financial industry participants, trade associations, corporate transparency advocacy groups and others.

The comment letters also prompted FinCEN to remove a prohibition against offshore access to the BOI registry. “The final rule removes a general requirement that financial institutions limit access to BOI to personnel within the United States,” Gacki said.

However, the final rule requires financial institutions to notify FinCEN within three business days of receiving a demand from a foreign government, such as a subpoena, for BOI obtained from FinCEN. Additionally, financial institutions must still obtain consent from customers before accessing their BOI in the registry. The final rule doesn’t affect existing requirements for financial institutions to collect BOI under the CDD rule.

Financial institutions will have direct access to search the BOI registry, but in a more limited fashion than the access granted to U.S. government authorities.

During a media call before the publication of the final rule, a senior official of the Treasury Department was asked whether financial institutions would be able to conduct batch searches of the BOI registry to make queries scalable, a concern expressed by some AML professionals.

Compliance Strategies

Moore Doeren Mayhew’s business advisors are here to assist with your BOI filing needs, including advising you through this new requirement, identifying whether you need to file, helping you obtain a required EIN needed to file as well as filing on your behalf. Contact us today for assistance.