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[This post was originally published as an Alert by Covington Financial Services.]

On September 29, 2022, the Financial Crimes Enforcement Network (“FinCEN”) issued the first of three final rules (the “Final Rule”) implementing the Corporate Transparency Act (“CTA”). This Final Rule, which largely adopts the provisions of FinCEN’s December 2021 Proposed Rule, addresses beneficial ownership reporting requirements. Subsequent rulemakings will address (i) access to and safeguards around information in the contemplated beneficial ownership information database and (ii) revisions to FinCEN’s existing customer due diligence (“CDD”) rule for financial institutions (which currently remains in place).…

Continue Reading FinCEN Releases Final Rule on Beneficial Ownership Disclosure Requirements: Seven Things To Know

[This post was originally published as an Alert by Covington Financial Services.]

On December 7, 2021, the Financial Crimes Enforcement Network (“FinCEN”) invited public comment on its proposed rule (the “Proposed Rule”) implementing the beneficial ownership disclosure requirements of the Corporate Transparency Act (“CTA” or “Act”). Comments to the Proposed Rule are…

[This post was originally published as an Alert by Covington Financial Services.]

On Thursday, April 1, 2021, the Financial Crimes Enforcement Network (“FinCEN”) released an advance notice of proposed rulemaking (“ANPR”), presenting the public with its first opportunity to comment on the beneficial ownership disclosure requirements in the Corporate Transparency Act (“CTA”), a key component of the Anti-Money Laundering Act of 2020 (“AMLA”).  The ANPR focuses on procedures and standards for beneficial ownership reporting by covered companies, and on the design and use of FinCEN’s planned beneficial ownership database.  The ANPR does not address expected modifications to the customer due diligence (“CDD”) requirements of financial institutions, which will be the subject of a separate rulemaking process.  Comments on the ANPR are expected to be due on May 5, 2021 — i.e., 30 days after the ANPR is slated for publication in the Federal Register.

This alert summarizes key issues in the ANPR, as relevant both to financial institutions and to reporting companies. …
Continue Reading FinCEN Releases Advance Notice of Proposed Rulemaking on Beneficial Ownership Disclosure Requirements

On Friday, January 1, 2021, the Senate voted to override President Trump’s veto of the 2021 National Defense Authorization Act (“2021 NDAA”) by a vote of 81 -13.  The Senate’s override follows the House of Representatives’ override on December 28, 2020, and the 2021 NDAA is now law.  As we reported on December 23, 2020…

Earlier this month, both houses of Congress passed the 2021 National Defense Authorization Act (“2021 NDAA”).  Included in Title LXIV of the 2021 NDAA (Title 64 for those of us rusty on Roman numerals), are new information reporting requirements intended to identify individual beneficial owners of certain business entities.  Subject to a number of exceptions, the bill requires certain U.S. and foreign entities to file annual reports with the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) that will disclose information regarding the beneficial owners of reporting companies.  Overall, the reporting will identify those individuals exercising “control,” as the term is defined, over those entities required to report.  According to the legislation, over two million corporations, LLCs, and similar entities are formed under state law in the United States each year, and many “malign actors seek to conceal their ownership” of various entities intended to facilitate illegal activity.  Accordingly, the reporting mandated by the legislation is intended to help protect national security interests and interstate and foreign commerce, as well as counter the financing of terrorism.

The legislation passed both chambers by overwhelming majorities − 335-78 in the House and 84-13 in the Senate. Notwithstanding the significant Congressional support, President Trump has not yet signed the bill into law and has suggested that he may veto the bill (H.R. 6395).  The legislation will become law tomorrow (December 24, 2020) if the President does not veto the bill.  Even if the President vetoes the bill, it appears likely that Congress will override it by reconvening after Christmas and before the new year.  H.Res. 1271 (the rule providing for the consideration of the Senate amendment to H.R. 133 (the end-of-year package that includes COVID relief)) provided that if a veto message is laid before the House on the 2021 NDAA, the veto message and the bill shall be postponed until the legislative day of Monday, December 28, 2020.  Accordingly, if Trump vetoes the bill, the House will vote on its override on December 28.

UPDATE:  President Trump vetoed the bill on December 23, 2020.

UPDATE:  The House of Representatives voted to override President Trump’s veto on December 28, 2020.  Additional coverage is available here.  

UPDATE:  The Senate voted to override President Trump’s veto on January 1, 2021.  Additional coverage is available here.…

Continue Reading New Information Reporting on Beneficial Owners Included in 2021 NDAA

A question appears at the bottom of Schedule B (Interest and Dividend Income) of the Form 1040 (U.S. Individual Income Tax Return) that asks individual taxpayers if during the taxable year they had any interest in or signature or other authority over a bank, securities, or other financial account in a foreign country during the tax year.  Based upon a review of historical tax forms, the question first appeared on the 1976 Schedule B.  The historic Form 1040 instructions for 1976 and 1977 indicate that the FBAR was originally designated as Form 4683 for 1976 and subsequently revised and renumbered as the Form 90-22.1 in 1977.
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Continue Reading Is a Circuit Split Brewing over FBAR Willfulness Penalties?