Lawmakers Demand FinCEN Educate Businesses on Beneficial Ownership Reporting Requirements

Lawmakers are demanding greater clarity on FinCEN’s forthcoming beneficial ownership reporting requirements.

In a Wednesday (June 7) letter to Financial Crimes Enforcement Network (FinCEN) Acting Director Himamauli Das and U.S. Treasury Secretary Janet Yellen, several House members, including House Financial Services Committee Chairman Patrick McHenry, R-N.C., expressed concern that with only six months until the effective date of the impending Beneficial Ownership Information collection rule, FinCEN has yet to lay out a clear plan for educating small businesses, according to a Thursday press release.

This lack of clarity could lead to small businesses being held civilly or criminally liable for noncompliance, the letter said.

The lawmakers are calling on FinCEN to provide a clear plan for engagement and education to ensure that small businesses are aware of their reporting responsibilities, per the letter.

“We write today to express our concerns with the Financial Crimes Enforcement Network’s (FinCEN) planned roll out to inform reporting companies of their forthcoming obligations to file beneficial ownership information with FinCEN,” the letter said. “Specifically, we believe that press releases are insufficient to ensure that the approximately 32.6 million small businesses that will be expected to comply in 2024 understand their upcoming responsibilities.”

The letter is part of McHenry’s work to ensure that beneficial ownership rulemaking adheres to congressional intent, ensuring reporting companies cannot avoid transparency and preventing FinCEN from instituting an overly burdensome compliance regime on small businesses or infringing on Americans’ privacy rights, the release said.

FinCEN’s beneficial ownership information reporting requirement was finalized in October 2022, with the agency saying the rule is needed to crack down on illicit finance.

The rule requires most companies doing business in the U.S. to report information about their beneficial owners — the people who own or control the company. It goes into effect Jan. 1, 2024.

“This final rule is a significant step forward in our efforts to support national security, intelligence and law enforcement agencies in their work to curb illicit activities,” Das said when announcing the issuance of the final rule.

The implementation of the new requirements comes at a time when FinCEN has advised financial institutions to be wary of companies trying to dodge the sanctions placed on Russia.

Das said in a March 2022 alert that both state actors and oligarchs may try to evade the Russian sanctions.