The updated FAQs from the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department provide new information regarding the implementation of access to beneficial ownership information (BOI) as outlined in Section 6403 of the Corporate Transparency Act (CTA), P.L. 116-283.
According to the updated FAQs released on Thursday, the phased rollout of BOI access will commence this spring with a pilot program for select federal agency users. This phased approach will continue until spring 2025, when financial institutions subject to customer due diligence requirements will gain access to BOI.
The timeline includes granting access to Treasury offices and other federal agencies involved in law enforcement and national security activities by summer 2024. Additional federal agencies engaged in similar activities will gain access in the fall of 2024. By the winter of 2024, intermediary federal agencies will be granted access in connection with foreign government requests. Finally, in the spring of 2025, access will be extended to financial institutions and their supervisors.
FinCEN, the administrator of the CTA, is not currently accepting access requests. Further guidance on how to request access will be provided in the future, according to the FAQs.
Director Andrea Gacki emphasized the high level of security measures implemented for the BOI database, meeting federal standards outlined in the Federal Information Security Modernization Act (FISMA). FinCEN will ensure that only authorized individuals access BOI for purposes permitted under the CTA.
In December 2023, FinCEN issued an 82-page final rule on access (RIN 1506-AB59) without specifying the timing, confirming only a phased approach starting in 2024.
The updated FAQs also clarify the definition of a beneficial owner, stating that trusts, corporations, or other legal entities are not considered beneficial owners. However, information about an entity may be used in specific circumstances instead of information about a beneficial owner.
Reporting requirements under the CTA mandate that reporting companies disclose the identity and information of beneficial owners, as well as “applicants” for new entities formed after Jan. 1, 2024. Reporting companies must provide detailed information about both the companies and their beneficial owners and applicants. Violations of these requirements are subject to fines and potential imprisonment.
Although the BOI reporting requirements are currently on hold for certain entities due to legal proceedings, FinCEN has stated that these requirements still apply to all other businesses as mandated by the CTA.
FinCEN estimates that BOI reporting regulations will affect approximately 32.6 million entities, with an additional 5 million entities added annually through 2034.