FinCEN Must Preserve Beneficial Ownership Data Usefulness, Discourage Inappropriate Reporting Omissions

Washington, D.C. — The Bank Policy Institute submitted comments to the Financial Crimes Enforcement Network today expressing concern about the proposed reporting form for its beneficial ownership final rule. The proposal would allow reporting companies to omit information as “unknown” or “unable to identify” without requiring them to clarify why the information could not be provided.

What BPI is saying:

“Consistent with the Corporate Transparency Act, the usefulness, accuracy and completeness of the beneficial ownership information reported to FinCEN should be paramount,” wrote BPI in its letter. “Therefore, we urge FinCEN to adjust the form to require a reporting company, each time it checks an ‘unknown’ box, to explain why it was unable, and the efforts it undertook, to obtain the required information. This will ensure that the reported information is accurate and complete, and the usefulness of the information reported to FinCEN to all authorized users is not limited.”

BPI’s recommendations:

In the letter, BPI states that the proposed reporting form could discourage reporting companies from undertaking a “diligent inquiry” to secure the required information. BPI suggests that FinCEN:

  • Clarify the limited situations in which an “unknown” or “unable to identify” box may be checked, and what constitutes “diligent inquiry” and “care to verify”;
  • Adjust the form to require a reporting company to explain why it was unable, and the efforts it undertook, to obtain the required information when checking the “unknown” or “unable to identify” box;
  • Reiterate that, if the reporting company checks one or more of these boxes, it is obligated to subsequently update the reported information as needed and correct any incorrectly reported information, within specific timeframes; and
  • Confirm that the reporting company may be subject to civil or criminal penalties if it checks “unknown” or “unable to identify” without undertaking diligent inquiry or care to verify, or subsequently updating or correcting the information as required. 

Additional background:

The Beneficial Ownership Information Reporting Requirements final rule was issued in September 2022.  Under the rule, each reporting company is required to report its owners to FinCEN. Each reporting company must certify that its report to FinCEN is true, correct and complete. Individuals, not just reporting companies, may be subject to civil or criminal penalties for willfully failing to report or for willfully filing false information. While there may be rare circumstances where information is legitimately unknown, these circumstances should be limited. 

BPI encourages FinCEN to consider these recommendations to enhance the usefulness of the information reported to FinCEN for law enforcement, banks and other directory users. BPI agrees, as recognized by Congress in the CTA, that uniform beneficial ownership reporting requirements are important to more effectively combat illicit finance.


About Bank Policy Institute.

The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.

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