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Washington: Definitive regulations overseeing entry to the beneficial ownership database released

Existing companies are granted a one-year window for filing, while new companies are required to file within 90 days of creation or registration with FinCEN, which will oversee and manage the national beneficial ownership database. Reporting entities must furnish four key details about each beneficial owner:


1. Name

2. Date of birth

3. Address

4. The identifying number of a current US driver's license, passport, or another document issued by a state or local government body, or a current foreign passport.


In late 2023, FinCEN introduced a final rule outlining the rights of authorized entities to access this information on the database. Access will be gradually implemented starting from February 20. Authorized bodies encompass federal, state, and foreign law enforcement agencies, financial institutions, regulators involved in customer due diligence, and the US Treasury. While based on a draft from the previous year, the final rule includes noteworthy changes.


Notably, the permissible purpose of 'customer due diligence requirements under applicable law' has been broadened. It now encompasses 'any legal requirement or prohibition designed to counter money laundering or the financing of terrorism, or to safeguard the national security of the United States.' This allows financial institutions to integrate FinCEN's beneficial information into their processes for enhanced due diligence, suspicious activity monitoring, and reporting.


The phased access, starting February 20, initiates with a pilot program for select federal agency users, followed by other federal agencies, and then state and local law enforcement agencies. Financial institutions may access the database later, likely after FinCEN issues an updated Know Your Customer (KYC) rule, anticipated in January 2025. Some financial entities, like certain money service businesses, will be excluded from access. However, the rule permits sharing beneficial ownership information outside the USA, with exceptions for specific locations, like China and Russia. Notably, written consent is no longer mandatory; verbal consent suffices.


The operational details of the database are yet unclear. FinCEN does not plan bulk data exports but intends to offer an application programming interface for authorized users to query the database.

Contacts


If you require assistance in relation to the above and/or would like to discuss anything further, please do not hesitate to contact info@act.london or your usual A.C.T. contact.


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