Kevin S. Matthews is an instructional assistant professor of accounting at George Mason University’s School of Business, and Donald T. Williamson is the Kogod Eminent Professor of Taxation and Howard S. Dvorkin Faculty Fellow in accounting at American University’s Kogod School of Business.
In this article, Matthews and Williamson describe forthcoming requirements for disclosing to Treasury’s Financial Crimes Enforcement Network the beneficial owners and company applicants of most small limited liability entities created or doing business in the United States.
- Background
- Filing Deadlines
- Updated and Corrected Reports
- Beneficial Owner Information
- FinCEN Identifier
- Beneficial Owner — Substantial Control
- Beneficial Owner — Ownership Interests
- Beneficial Owner Exceptions
- Company Applicant
- Reporting Company Information
- Reporting Company Exemptions
- Reporting Violation Penalties
- Confidentiality of Information
- Certification of Report
- Conclusion
Beginning next year, final regulations under the Corporate Transparency Act of 2020 (CTA) will authorize Treasury’s Financial Crimes Enforcement Network (FinCEN) to require most small, closely held corporations and partnerships to report the identity of their owners and individuals who have filed applications with states and other jurisdictions to create or register these entities.1 FinCEN estimates that about 32.6 million reports will be filed initially, with an additional 5 million filings annually for the next nine years.2
We believe many persons obligated to meet these requirements are unaware of their existence and should begin to determine if they can meet a filing exception or assemble the information needed for filing on the new Treasury form.3 This article describes what entities must file and what information will be required on forms FinCEN may promulgate later this year.4 While the filing deadlines are not immediate, potential filers and their advisers need to know now what information must be collected to report on these forms.
Background
The new FinCEN filing requirements are the result of the CTA, which provides who must file a FinCEN report, what information is required on the report, and when it is due.5 The preamble for the regulations implementing the CTA states that the act’s purpose is to prevent corporations and other entities from being used as vehicles for money laundering, terrorist financing, tax fraud, and other illegal activities.6 Calling for the filing of millions of new forms has been described as a “bazooka killing a fly,”7 but law enforcement agencies and policymakers agree that shell and front companies are used by criminals and terrorist organizations to conceal their identities and launder illegally obtained funds through the U.S. financial system, undermining our economy and national security.8
To address the need to stop these illegal activities, the CTA added a section to the Bank Secrecy Act requiring information about the beneficial owners and company applicants of some reporting companies.9 Following the issuance of proposed regulations10 and an extensive public comment period, final regulations were issued on September 29, 2022.11 These new rules result in the United States following the lead of over 30 countries that require transparency regarding the ownership of limited liability entities.12
The sheer magnitude of the information to be collected is staggering and will require significant resources to administer.13 But once the information is centralized and accessible, beneficial ownership information (BOI) will significantly enhance law enforcement’s ability to curtail illegal activity using shell or front companies to conceal the identity of criminals.
Filing Deadlines
The new rules14 require most small closely held domestic and foreign entities (reporting companies) to submit BOI to FinCEN and, under strict protocols,15 permit FinCEN to share this information with law enforcement agencies.16 Domestic reporting companies created on or before January 1, 2024, and any foreign entity registered to do business in the United States no later than January 1, 2024, will be required to submit information to FinCEN by January 1, 2025.17
A domestic reporting company created after January 1, 2024, or a foreign reporting company registered to do business in the United States after January 1, 2024, will have 30 days after its creation or registration to file.18 The regulations measure the 30-day creation or registration period from the date the secretary of state or similar office approves the entity’s formation or registration, that is, the earlier of the date the reporting company receives notice of its creation (or registration) or the date notice of the creation or registration is available in a publicly accessible registry.19
Updated and Corrected Reports
If any required information in an initial report is inaccurate or a subsequent event or circumstance changes the information, the reporting company is to file a revised report within 30 days of the change or discovery of the error.20 If a reporting company later meets the requirements for a filing exemption, that information must be included in an updated report stating that the entity is no longer a reporting company.21 Similarly, if an entity ceases to meet the criteria for an exemption, the entity must file a report within 30 days after the date the entity is no longer exempt.22
A reporting company is to report all changes in required information regardless of its good-faith or other standards, such as materiality.23 But a reporting company need only update information concerning itself or its beneficial owners and not information about its applicant, since it may not have a continuing relationship with the applicant to know of changes in the applicant’s information. However, an updated report must still be filed regarding any inaccurate information about a company applicant on its initial filing.24
An updated report is required within 30 calendar days following the date on which there is a change (including inaccuracies on the initial report) concerning information previously submitted to FinCEN. These include changes regarding the identity of a beneficial owner or any changes concerning information reported about a beneficial owner, but not company applicants.25 In the case of inaccuracies on the initial report, the reporting company has 90 days, rather than 30 days, from the date the initial report was filed to correct the error.26 If an entity later becomes eligible for a reporting exemption, it must file an updated report.27
For a deceased beneficial owner, an updated report identifying the new beneficial owners is due within 30 days of the settlement of the estate either by operation of the intestacy laws of a jurisdiction in the United States or by testamentary disposition. The reporting company will apply the beneficial owner definition to determine whether any successors are beneficial owners.28 An updated report is also necessary upon a minor child who is a beneficial owner attaining the age of majority when the reporting company had reported a parent or legal guardian of the child as the beneficial owner.29
A change to the identification document filed with the report for each beneficial owner requires an updated report only when that change is the individual’s home, birth date, address, or the unique identifying number on the document.30 The regulations make no mention of an updated report requirement when the reporting company terminates or dissolves.31
Beneficial Owner Information
For each beneficial owner and every individual who files an application to form a domestic entity or register a foreign entity to do business in the United States (company applicant), reporting companies must submit to FinCEN the individual’s full legal name,32 date of birth,33 and street address.34 In the case of a company applicant who forms or registers entities in the ordinary course of its trade or business, the street address of the business can be used;35 otherwise the reporting company must submit the individual’s street address.36 They must also submit a unique identifying number from an “acceptable identification document”37 — defined as a non-expired (1) U.S. passport,38 (2) identification document issued by a state or local government,39 or (3) state driver’s license.40 If the individual lacks one of these documents, a non-expired foreign passport is acceptable.41 The report must include an image of the acceptable identification document showing the unique identifying number.42
FinCEN Identifier
In lieu of an acceptable identification document, FinCEN is required to offer a unique identifier (a FinCEN ID)43 upon request by any entity or individual who is otherwise required to report information to a reporting company.44 A reporting company may then report the FinCEN ID in lieu of the required identifying information.45
An individual obtains a FinCEN ID by submitting to FinCEN an application containing the information the individual would otherwise provide to a reporting company as a beneficial owner or company applicant of the reporting company.46 A reporting company may obtain a FinCEN ID when it submits its initial filing or at any time thereafter.47
Beneficial Owner — Substantial Control
For reporting purposes, a beneficial owner is “any individual who, directly or indirectly, either exercises ‘substantial control’ over the reporting company or owns or controls at least 25 percent of the ‘ownership interests’ of the reporting company.”48 A reporting company will always have at least one owner with substantial control and possibly several owners with such control, regardless of whether any individual owns 25 percent or more of the reporting company.
The regulations describe the following circumstances in which an individual has substantial control:
A senior officer of the reporting company (de jure control)49 is defined as the president, CFO, general counsel, CEO, chief operating officer, or any other officer who performs a similar function. The roles of secretary and treasurer are excluded because their functions are ministerial, with little control over the company.50
An individual with authority over the appointment or removal of any senior officer or a majority of the board of directors (or similar body) of the reporting company (de facto control).51
An individual having power over the direction or determination of, or substantial influence over, important reporting company decisions.52
For this final factor, the regulations provide the following non-exhaustive examples:
the nature, scope, and attributes of the business of the reporting company, including the sale, lease, mortgage, or other transfer of any principal assets of the reporting company;53
the reorganization, dissolution, or merger of the reporting company;54
major expenditures or investments, issuances of any equity, the incurrence of any significant debt, or approval of the operating budget of the reporting company;55
the selection or termination of business lines or ventures or geographic focus of the reporting company;56
compensation schemes and incentive programs for senior officers;57
the entry into, the termination of, or the fulfillment or nonfulfillment of significant contracts;58
amendments of the reporting company’s substantial governance documents, including articles of incorporation or similar formation documents, bylaws, and significant policies or procedures; and59
a catchall provision for “any other form” of substantial control over the reporting company.60
Example 1: John and Jane are married and with their son, Joe, each owns one-third of JJ&J, a corporation. Joe is the president and COO, and John is the general counsel. If there are no other senior officers or individuals exercising substantial control, John, Jane, and Joe are the beneficial owners of JJ&J, the reporting company. If Joe steps down as president and his brother Jonas becomes president, then Jonas also becomes a beneficial owner by virtue of being a senior officer.61
Example 2: Susan and Sarah each own 50 percent of S and S Inc. Susan is the president, and Sarah is the CEO. Henry has been the manager of the corporation for many years, responsible for daily operations and staffing but not hiring senior officers. Henry has responsibility for all company disbursements under $5,000. He does not make major decisions or substantially influence the strategy of the company. Consequently, only Susan and Sarah are beneficial owners of S and S Inc. because Henry does not have substantial control over S and S Inc.62
While identifying individuals with substantial control over the reporting entity will, in most cases, be self-evident, a wide range of circumstances must be considered to prevent the avoidance of full disclosure of beneficial owners. Consequently, the regulations describing substantial control set out a wide range of legal relationships, including the powers of a trustee over a trust, that include:
board membership in the reporting company;63
ownership or control of a majority of the voting power or voting rights of the reporting company;64
rights associated with any financing arrangement or interest in a company;65
control over one or more intermediary entities that separately or collectively exercise substantial control over a reporting company;66
arrangements or financial or business relationships, whether formal or informal, with other individuals or entities acting as nominees;67 or
any other contract, arrangement, understanding, relationship, or otherwise.68
To address these more complex situations, accounting and legal professionals will need to assess the relative importance of each factor to determine an individual’s control over the reporting company.
Beneficial Owner — Ownership Interests
To identify individuals with 25 percent or more ownership interests in the reporting company for purposes of being a beneficial owner, ownership includes all forms of equity, stock, capital or profits, interests, convertible instruments, warrants, rights, options, or privileges to acquire equity.69 In measuring an individual’s ownership interest, the degree of control that interest represents over the company is irrelevant.
While not adopting a constructive ownership rule, an individual has an ownership interest in a reporting company through any contract, arrangement, understanding, or relationship, including joint ownership of an undivided interest in the reporting company and an interest held through a nominee, intermediary, custodian, or other agents of an individual.70 The following are all considered to hold ownership interests in a trust: (1) the trustee or other individual with authority to dispose of trust assets, (2) any beneficiary who is the sole recipient of trust income and principal, and (3) the grantor or settler who has the right to revoke the trust or withdraw assets from the trust.71
Most importantly, an individual owning or controlling an interest in one or more intermediary entities that separately or collectively own or control interests in a reporting company is considered to own the interest in the reporting company.72 Consequently, the same ownership interests could be considered owned or controlled by multiple individuals.
Example: Individuals A and B each own 25 percent of X Corporation that, in turn, owns 100 percent of Y Corporation. For purposes of beneficial ownership, both A and B own the same interest in Y through their ownership of X.
In calculating the 25 percent ownership threshold, options or other contingent interests in the reporting company are treated as exercised without regard to any discount for the present value of the contingent interest.73 Thus, if an individual holds an option for a 25 percent profit interest in an entity, the individual is considered as having a 25 percent ownership interest.
For partnerships, a person’s ownership interest is calculated as a percentage of the total outstanding capital and profit interests in the entity.74 For corporations, the threshold is measured as a percentage of the greater of the total voting power of all ownership interests entitled to vote or the total outstanding value of all classes of ownership interests.75 If the percentage of an ownership interest cannot be determined with “reasonable certainty,” any individual owning or controlling 25 percent of any class or type of ownership interest of a reporting company will be deemed to own or control 25 percent of all ownership interests in the reporting company.76
When an exempt entity has an ownership interest in a reporting company, and an individual has an ownership interest in both the reporting company and the exempt entity, the individual is a beneficial owner if the individual’s direct and indirect ownership interests through one or more exempt entities is 25 percent or more of the ownership interests in the reporting company.77 However, this rule does not require the reporting of any individual who only exercises substantial control of a reporting company through an exempt entity.78 And when the individual’s ownership interest in the reporting company arises exclusively from the individual’s interest in one or more exempt entities, then the reporting company may, in lieu of reporting information on the individual, only report information of the exempt entities.79
Example: Individual X holds a 24 percent ownership interest in reporting company Y and a 1 percent interest in Y through an exempt entity. Y must include X as a beneficial owner in its report. But if X’s ownership interest in Y is exclusively through an exempt entity, Y needs to report only the exempt entity. And if X has no direct or indirect ownership in Y but exercises substantial control over Y through an exempt entity, Y does not report X as a beneficial owner.
Beneficial Owner Exceptions
There are five circumstances in which an individual who otherwise would be a beneficial owner of a reporting company is exempt: (1) a minor child when the reporting company includes information of a parent or guardian;80 (2) a nominee, intermediary, custodian, or agent of an individual;81 (3) a reporting company’s employee who is not a senior officer;82 (4) an individual having only a future interest in the reporting company through future inheritance;83 and (5) a creditor of a reporting company.84
For this purpose, a minor child is defined under the law of the state in which the reporting company is organized, or the foreign company is first registered,85 and the report includes information about the child’s parent or legal guardian.86 However, when a minor child reaches the age of majority, the reporting company must file an updated report within 30 days.87
In the case of an individual’s beneficial ownership interest held in the name of a nominee, intermediary, custodian, or agent, the reporting company is to report the name of the individual who has actual control over the interest.88 Individuals performing ordinary advisory or contractual services for a reporting company are not beneficial owners, even if they have substantial influence (but not control) over a reporting company’s decisions. An employee is not a beneficial owner when the individual acts solely as a worker whose control over or economic benefit from the reporting company was solely from the individual’s employment, and the individual is not a senior officer.89 Thus, employees are not beneficial owners when they perform only ordinary employment activities that do not amount to substantial control over a reporting company.90
An individual is not a beneficial owner when the individual’s only interest in the reporting company is through a future right of inheritance that may cause the individual to become a beneficial owner.91 Whether an individual acquires an ownership interest by inheritance depends on the terms of a will, trust, state intestacy law, or terms of other legal documents created by a testator or settler.
A creditor is not a beneficial owner if the creditor neither has substantial control over the reporting company nor owns or controls 25 percent or more of the company’s ownership interests.92 An individual qualifies as a creditor when an individual’s rights and powers are derived solely from an entitlement to payment of a predetermined sum of money owed by a company.93 Therefore, a loan covenant or obligations requiring the company to manage its business a certain way or to maintain collateral securing the loan to secure or enhance the likelihood of payment of the company’s debt does not necessarily transform the creditor into a beneficial owner. Whether a right or condition imposed upon a company by a creditor creates substantial control or ownership depends on the facts and circumstances of each arrangement.
Company Applicant
The regulations specify that a company applicant who must be included in the report to FinCEN is an individual who directly files documents with a state office to create a domestic, or register a foreign, reporting company and the individual who is primarily responsible for directing or controlling that filing.94
Example: Attorney X supervises paralegal Y in the preparation of incorporation documents for Z Inc. After reviewing Y’s work, X directs Y to submit the documents with the appropriate state office. If Z is a reporting company, both X and Y are company applicants.
If an individual owner creates a reporting company and files the formation documents, that individual is both the company applicant and beneficial owner. Alternatively, if an individual prepares the formation documents and a family member or other individual files them with a state office, both are company applicants. However, employees of the state office processing documents and employees of business formation companies that offer software or online tools to assist in creating or registering companies are not company applicants unless they are personally involved in the formation or registration.95
Conceding the practical difficulty for existing reporting companies in obtaining information about company applicants who created or registered the company many years ago, the regulations require reporting companies in existence on January 1, 2024, to report only that fact without providing any information about the company applicant.96
Reporting Company Information
While the law specifies only the information needed to identify beneficial owners and company applicants of a reporting company, the regulations require the following information about the reporting company itself:
the full legal name;97
any trade name or “doing business as” name;98
the reporting company’s principal or primary U.S. street address;99
the reporting company’s jurisdiction of formation100 or, in the case of a foreign reporting company, the jurisdiction where the company is formed and the jurisdiction where it first registers in the United States;101 and
the IRS tax identification number of the reporting company or, in the absence of an IRS TIN, a TIN issued by a foreign jurisdiction and the name of the jurisdiction.102
Both domestic and foreign companies are subject to reporting requirements.103 A domestic reporting company includes a corporation, limited liability company, or any other entity created by filing a document with the secretary of state or similar office under the law of the jurisdiction where the corporation or LLC is created.104 Sole proprietorships, most trusts, general partnerships, and a person’s business license registrations do not require the filing of a formal document with a secretary of state or similar office and therefore are not reporting companies.105 Each state’s law dictates whether an entity must file organization or registration documents and therefore is a reporting company.
A foreign reporting company is a corporation, LLC, or other entity created under the law of a foreign country that registers to do business in the United States by filing a document with a secretary of state or similar office under state law.106 Like the definition of a domestic reporting company, the definition of a foreign reporting company looks to state law to determine if entity registration is required. Thus, if state law provides that some of a foreign entity’s activities in a state do not require registration, then the foreign entity is not a foreign reporting company regardless of its conduct of those activities in the United States.
Reporting Company Exemptions
There are 23 statutory exemptions from being a reporting company,107 most for entities already subject to substantial federal and state regulations requiring them to provide the same information sought by FinCEN.
Entities that cease to be exempt must file a report within 30 calendar days of the date they are no longer exempt.108 Also, Treasury is authorized to exempt by regulation other entities from collecting BOI when not in the public interest or in the interest of national security, intelligence, or law enforcement.109
The exemptions listed in the statute and regulations are:
1. Securities Reporting Issuers: A corporation issuing securities or information under the Securities Exchange Act of 1934.110
2. Government Authorities: An entity created under domestic law that exercises governmental authority on behalf of the United States or any state or political subdivision.111
3. Banks: A bank defined under the Federal Deposit Insurance Act, the Investment Company Act of 1940, or the Investment Advisers Act of 1940.112
4. Credit Union: A federal or state credit union.113
5. Depository Institution Holding Company: A bank holding company or a savings and loan holding company.114
6. Money Services Business: A money transmitting business or money services business registered with Treasury.115
7. Broker/Dealer in Securities: A broker or dealer registered under the Securities Exchange Act of 1934.116
8. Securities Exchange or Clearing Agency: An exchange or clearing agency registered under the Securities Exchange Act of 1934.117
9. Other Exchange Act Registered Entities: Any other entity not described in (1), (7), or (8) above that is registered with the SEC.118
10. Investment Company/Adviser: An investment company registered under the Investment Company Act of 1940 or an investment adviser registered under the Investment Advisers Act of 1940.119
11. Venture Capital Fund Adviser: An investment adviser under the Investment Advisers Act of 1940 who has registered as a venture capital fund adviser with the SEC.120
12. Insurance Company: An insurance company defined in the Investment Company Act of 1940.121
13. State Licensed Insurance Producer: A state licensed insurance producer with an operating presence at a physical office in the United States.122
14. Commodity Exchange Act Registered Entity: An entity registered with the Commodity Futures Trading Commission123 or a futures commission agent, introducing broker, swap dealer, major swap participant, commodity pool operator, commodity trading advisor,124 or a retail foreign exchange dealer registered with the Commodities Futures Trading Commission under the Commodity Exchange Act.125
15. Accounting Firm: A public accounting firm registered under the Sarbanes-Oxley Act of 2022.126
16. Public Utility: A regulated public utility that provides telecommunication services, electrical power, natural gas, or water and sewer services in the United States.127
17. Financial Market Utility: A financial market utility designated by the Financial Stability Oversight Council.128
18. Pooled Investment Vehicle: A pooled investment vehicle that is operated or advised by a bank, credit union investment company, or investment adviser.129
19. Tax-Exempt Entity: An organization exempt from federal income tax. In the event the organization ceases to be exempt from federal income tax, the organization will remain exempt for 180 days from the date of the exemption loss.130 Tax-exempt political organizations131 and some charitable and split-interest trusts are not reporting companies.132
20. Entity Assisting Tax-Exempt Entity: A corporation, LLC, or similar entity that operates exclusively to provide financial assistance to, or hold governance rights over, any tax-exempt entity that is itself exempt from reporting, that is, a charity, political organization, or some charitable or split-interest trusts.133 The entity must be a U.S. person, that is, created under U.S. law,134 and be owned or controlled exclusively by one or more individuals who are U.S. citizens or lawfully permitted for permanent residence.135 The entity must derive a majority of its funding or revenue from one or more U.S. citizens or individuals lawfully admitted for permanent residence.136
21. Large Operating Companies: Any entity employing more than 20 full-time employees in the United States137 and having more than $5 million of gross income reported on a federal income or information return for the previous year.138 The entity must have an operating presence at a physical office in the United States.139
22. Subsidiary of Exempt Entity: Entities entirely owned or controlled, directly or indirectly, by one or more other exempt entities other than money service businesses, pooled investment vehicles, entities assisting a tax-exempt entity, or inactive entities next described.140
23. Inactive Entity: Any entity that (1) is in existence on or before January 1, 2020; (2) is not engaged in active business; (3) is not owned directly or indirectly, wholly or partially by a foreign person; (4) has had no ownership change in the preceding 12 months; (5) has neither sent nor received within the last 12 months more than $1,000 directly or indirectly through a financial account in which the entity or any affiliate of the entity had an interest; and (6) does not hold any assets anywhere in the world, including any ownership interest in any other entity.141
Most of these exemptions target categories of specialized entities (banks, tax-exempt organizations, insurance companies, utilities, and so forth) that are already subject to substantial federal or state regulation. Only the “large operating company” exemption offers closely held for-profit entities with limited liability the opportunity to avoid reporting. Thus, all small, privately held for-profit businesses operating through a limited liability entity will need to meet the large operating company exemption to avoid reporting.
Reporting Violation Penalties
To ensure compliance with these reporting requirements, any person who willfully provides false or fraudulent information to a reporting company or willfully fails to file a complete initial or updated report with FinCEN is subject to a $500-per-day fine up to $10,000 and imprisonment for up to two years.142 Also, any person who, without authorization, knowingly discloses or uses BOI is liable for a $500-per-day penalty up to $250,000 and up to five years’ imprisonment.143 A person may avoid penalties if, after learning of any inaccuracy in a report, the report is corrected within 90 days.144
Persons subject to these penalties include not only the reporting company and its senior officers but also any individual or other entity responsible for filing the report, and any person who provides BOI to another person for inclusion on a report.145 While individuals with substantial control over any entity or reporting company are not liable for a failure to report complete or updated ownership information, any senior officer of an entity required to provide this information is personally liable.146 A senior officer for this purpose is an individual holding the position or exercising the authority of a president, CFO, general counsel, CEO, COO, or any other officer, regardless of title, who performs similar functions.147 Thus, senior officers of entities that are not reporting companies remain liable for reporting penalties for willful failure to provide BOI to a reporting company.
Confidentiality of Information
Access to BOI is limited to federal and state agencies for the furtherance of national security, intelligence, or law enforcement activity.148 Any other law enforcement or regulatory agency and any foreign country under a treaty with the United States must obtain authorization from “a court of competent jurisdiction” to obtain BOI as part of a criminal or civil investigation.149 With the consent of the reporting company, an agency regulating a financial institution can obtain BOI for oversight of the financial institution or to further compliance with customer due diligence requirements of a financial institution under local law.150
Before this new reporting regime can be implemented and used by law enforcement and other federal agencies, electronic means of collecting, storing, and accessing information must be developed that ensure confidentiality.151 Congress directs Treasury to maintain BOI “in a secure nonpublic database, using information security methods and techniques that are appropriate to protect non-classified information security systems at the highest security level.”152
To this end, FinCEN intends to develop a beneficial ownership secure system to receive, store, and maintain BOI. FinCEN has requested a budget increase to support the creation and implementation of that system, and said that without additional appropriations, its implementation and outreach plans will be delayed.153
Certification of Report
In filing a report, a reporting company (or an agent filing on its behalf) must certify under penalties of perjury that its report or application is true, correct, and complete.154 Therefore, reporting companies and their senior advisers must verify the accuracy of the information they receive from their beneficial owners and company applicants.155
Conclusion
This new reporting regime, which prohibits bearer shares,156 represents either a major step forward in achieving entity ownership transparency to curtail illicit activities or an outrageous invasion of personal privacy. While Congress authorized funds to be appropriated to notify the public of this new reporting regime, educate state and local officials of their responsibilities to participate in this regime, and create a secure electronic system for processing and storing BOI,157 FinCEN will undoubtedly be severely challenged to timely meet these congressional directives.158
These reporting obligations impose new responsibilities on professionals who organize limited liability entities and may cause them to pause before accepting these engagements. The personal exposure of attorneys, accountants, and their staff to timely report BOI will require professionals to gather substantially more information and exercise greater due diligence regarding the identities of owners of small limited liability entities. Engagement letters will need to make clear the information needed for the professional to represent a client, including explanations regarding the requirements to update or correct filed reports.
While FinCEN’s timetable for reporting BOI is not immediate, the CTA’s new reporting regime for the disclosure of beneficial owners and company applicants is a challenge attorneys who create limited liability entities must confront. Consequently, small business owners and professional representatives who create and register limited liability entities need to understand their responsibilities.
FOOTNOTES
1 31 U.S.C. section 5336. Division F is the Anti-Money Laundering Act of 2020, which includes the CTA, section 6403 of which amends the Bank Secrecy Act by adding a new to 31 U.S.C. section 5336 (Money and Finance).
2 See 87 F.R. 59549.
3 In fact, 31 U.S.C. section 5336(e)(1) directs Treasury to provide notice to persons of their obligations to report beneficial ownership information.
4 While beyond the scope of this article, 31 U.S.C. section 5336 provides extensive rules and safeguards regarding which governmental authorities may have access to the information and under what circumstances they may use that information. See 31 U.S.C. section 5336(c) and prop. reg. 31 C.F.R. section 1010.955 (concerning the availability of beneficial owner interest).
5 31 U.S.C. section 5336.
6 “Illicit actors frequently use corporate structures such as shell and front companies to obfuscate their identities and launder their ill-gotten gains through the U.S. financial system.” 87 F.R. 59498.
7 See Scott St. Amand, “Dredging the Ocean in Search of a Few Bad Shells: An Overview of the Final Corporate Transparency Act Regulations,” 63(23) Tax Mgmt. Memo. (Nov. 7, 2022). For a review of the CTA before its final regulations were promulgated, see Robert E. Ward, “We May Not Know Who You Are or Where You Live, but We Intend to Find Out: The Corporate Transparency Act of 2020,” 50(3) Tax Mgmt. Int’l. J. (Mar. 5, 2021).
8 See 87 F.R. 59498-59500.
9 31 U.S.C. section 5336 is titled “Beneficial Ownership Information Reporting Requirements.”
10 86 F.R. 69920.
11 87 F.R. 59498 et seq.
12 At least 30 countries have implemented some form of central administration for the registration of BOI, and more than 100 countries, including the United States, have committed to implementing beneficial ownership transparency reform. See Open Ownership, “The Open Ownership Map: Worldwide Commitments and Action.”
13 Before the CTA, only financial institutions collected BOI on legal entities opening an account, but there was no repository for the information being accessible to law enforcement agencies. See Custom Due Diligence Requirements for Financial Institutions, 31 C.F.R. section 1010.230 (2016), 81 F.R. 29398-29402.
14 31 U.S.C. section 5336.
15 After the final regulations generally implementing 31 U.S.C. section 5336, FinCEN issued proposed regulations describing strict protocols on security and confidentiality to protect information reported to FinCEN. See “Beneficial Ownership Information and Use of FinCEN Identifiers for Entities,” 87 F.R. 77404.
16 See generally 31 U.S.C. section 5336(b) and (c).
17 31 C.F.R. section 1010.380(a)(1)(iii). 31 U.S.C. section 5336(b)(1)(B) requires the reports of reporting companies formed or registered before January 1, 2024, (the effective date of the regulations) to be filed not later than two years from that date, but the statute does not preclude FinCEN from adopting a shorter deadline.
18 31 C.F.R. section 1010.380(a)(1)(i) and (ii). 31 U.S.C. 5336(b)(1)(C) provides that regulations are to set filing deadlines for reporting companies formed or registered after January 1, 2024.
19 31 C.F.R. section 1010.380(a)(1)(i) and (ii). Domestic, for this purpose, includes the 50 states, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, Guam, the U.S. Virgin Islands, and some other jurisdictions. 31 C.F.R. section 1010.380(f)(4) and (9).
20 31 C.F.R. section 1010.380(a)(2)(i). The CTA requires updates to be filed not later than one year after a change regarding any reported information but does not preclude a shorter deadline. 31 U.S.C. 5336(b)(1)(D).
21 31 C.F.R. section 1010.380(a)(2)(ii).
22 31 C.F.R. section 1010.380(a)(1)(iv).
23 31 U.S.C. section 5336(b)(1)(D); 31 C.F.R. section 1010.380(a)(2). See also 87 F.R. 59513.
24 Id.
25 31 C.F.R. section 1010.380(a)(2) and (3).
26 While 31 C.F.R. section 1010.380(a)(3) requires correction of an inaccurate report within 30 days from the date the reporting company becomes aware or has reason to know of an inaccuracy, the regulation acknowledges the safe harbor of 31 U.S.C. section 5336(h)(3)(C)(i)(I)(bb) from civil and criminal penalties for willfully filing an incorrect return if the error is corrected within 90 days from the date the initial report is submitted.
27 31 C.F.R. section 1010.380(a)(2)(ii).
28 31 C.F.R. section 1010.380(a)(2)(iii).
29 31 C.F.R. section 1010.380(a)(2)(iv).
30 31 C.F.R. section 1010.380(a)(2)(v).
31 However, the preamble to the regulations states that FinCEN does not expect an updated report upon termination or dissolution. 87 F.R. 59514.
32 31 U.S.C. section 5336(b)(2)(A)(i); 31 C.F.R. section 1010.380(b)(1)(ii)(A).
33 31 U.S.C. section 5336(b)(2)(A)(ii); 31 C.F.R. section 1010.380(b)(1)(ii)(B).
34 31 U.S.C. section 5336(b)(2)(A)(iii); 31 C.F.R. section 1010.380(b)(1)(ii)(C).
35 31 C.F.R. section 1010.380(b)(1)(ii)(C)(1).
36 31 C.F.R. section 1010.380(b)(1)(ii)(C)(2).
37 31 U.S.C. section 5336(b)(2)(A)(iv)(I).
38 31 U.S.C. section 5336(a)(1)(A); 31 C.F.R. section 1010.380(b)(1)(ii)(D)(1).
39 31 U.S.C. section 5336(a)(1)(B); 31 C.F.R. section 1010.380(b)(1)(ii)(D)(2).
40 31 U.S.C. section 5336(a)(1)(C); 31 C.F.R. section 1010.380(b)(1)(ii)(D)(3).
41 31 U.S.C. section 5336(a)(1)(D); 31 C.F.R. section 1010.380(b)(1)(ii)(D)(4).
42 31 C.F.R. section 1010.380(b)(1)(ii)(E).
43 31 U.S.C. section 5336(b)(2)(A)(iv)(II).
44 31 C.F.R. section 1010.380(f)(2).
45 31 U.S.C. section 5336(b)(3); 31 C.F.R. section 1010.380(b)(4). The proposed regulations to 31 U.S.C. section 5336(b)(3)(C) permitted a reporting company to report the FinCEN ID of an intermediary entity in lieu of reporting the company’s beneficial owner. The final regulation reserved on this rule out of concern it would obscure the identity of the ultimate beneficial owner. 31 C.F.R. section 1010.380(b)(4)(i)(B).
46 31 C.F.R. section 1010.380(b)(4)(i)(A).
47 31 C.F.R. section 1010.380(b)(4)(i)(B).
48 31 U.S.C. section 5336(a)(3)(A).
49 31 C.F.R. section 1010.380(d)(1)(i)(A).
50 31 C.F.R. section 1010.380(f)(8).
51 31 C.F.R. section 1010.380(d)(1)(i)(B).
52 31 C.F.R. section 1010.380(d)(1)(i)(C). While accountants, attorneys, and other tax professionals may exert considerable influence over the reporting company, they remain agents of senior officers who are primarily responsible for making decisions.
53 31 C.F.R. section 1010.380(d)(1)(i)(C)(1).
54 31 C.F.R. section 1010.380(d)(1)(i)(C)(2).
55 31 C.F.R. section 1010.380(d)(1)(i)(C)(3).
56 31 C.F.R. section 1010.380(d)(1)(i)(C)(4).
57 31 C.F.R. section 1010.380(d)(1)(i)(C)(5).
58 31 C.F.R. section 1010.380(d)(1)(i)(C)(6).
59 31 C.F.R. section 1010.380(d)(1)(i)(C)(7).
60 31 C.F.R. section 1010.380(d)(1)(i)(D).
61 See 87 F.R. 59529.
62 Id.
63 31 C.F.R. section 1010.380(d)(1)(ii)(A).
64 31 C.F.R. section 1010.380(d)(1)(ii)(B).
65 31 C.F.R. section 1010.380(d)(1)(ii)(C).
66 31 C.F.R. section 1010.380(d)(1)(ii)(D).
67 31 C.F.R. section 1010.380(d)(1)(ii)(E).
68 31 C.F.R. section 1010.380(d)(1)(ii)(F).
69 31 C.F.R. section 1010.380(d)(2)(i). However, calls or other options held by third parties of which the reporting company is without the knowledge or involvement do not constitute ownership for this purpose. 31 C.F.R. section 1010.380(d)(2)(i)(D).
70 31 C.F.R. section 1010.380(d)(2)(ii)(A) and (B).
71 31 C.F.R. section 1010.380(d)(2)(ii)(C).
72 31 C.F.R. section 1010.380(d)(2)(ii)(D).
73 31 C.F.R. section 1010.380(d)(2)(iii)(A).
74 31 C.F.R. section 1010.380(d)(2)(iii)(B).
75 31 C.F.R. section 1010.380(d)(2)(iii)(C).
76 31 C.F.R. section 1010.380(d)(2)(iii)(D).
77 31 C.F.R. section 1010.380(b)(2)(i) (implementing 31 U.S.C. 5336(b)(2)(B)).
78 31 U.S.C. section 5336(b)(2)(B) only applies to circumstances in which the exempt company has an ownership interest in the reporting company and does not refer to relationships involving substantial control.
79 31 C.F.R. section 1010.380(b)(2)(i).
80 31 U.S.C. section 5336(a)(3)(B)(i); 31 C.F.R. section 1010.380(d)(3)(i).
81 31 U.S.C. section 5336(a)(3)(B)(ii); 31 C.F.R. section 1010.380(d)(3)(ii).
82 31 U.S.C. section 5336(a)(3)(B)(iii); 31 C.F.R. section 1010.380(d)(3)(iii).
83 31 U.S.C. section 5336(a)(3)(B)(iv); 31 C.F.R. section 1010.380(d)(3)(iv).
84 31 U.S.C. section 5336(a)(3)(B)(v); 31 C.F.R. section 1010.380(d)(3)(v).
85 31 C.F.R. section 1010.380(d)(3)(i).
86 31 C.F.R. section 1010.380(b)(2)(ii).
87 31 C.F.R. section 1010.380(a)(2)(iv).
88 31 C.F.R. section 1010.380(d)(2)(D).
89 U.S.C. section 5336(a)(3)(B)(iii). See 31 C.F.R. section 1010.380(f)(8) (defining senior officer to be a president, CFO, general counsel, CEO, or any other officer, regardless of title, performing similar functions).
90 See 31 C.F.R. section 1010.380(f)(1) (defining employee by reference to 26 C.F.R. section 54.4980-1(a)(15), which adopts the common law standard of 26 C.F.R. section 31.3401(c)-1(b)).
91 31 U.S.C. section 5336(a)(3)(B)(iv); 31 C.F.R. section 1010.380(d)(3)(iv).
92 31 U.S.C. section 5336(a)(3)(B)(v); 31 C.F.R. section 1010.380(d)(3)(v).
93 31 C.F.R. section 1010.380(d)(3)(v).
94 31 U.S.C. section 5336(a)(2); 31 C.F.R. section 1010.380(e).
95 See 87 F.R. 59536.
96 31 C.F.R. section 1010.380(b)(2)(iv).
97 31 C.F.R. section 1010.380(b)(1)(i)(A).
98 31 C.F.R. section 1010.380(b)(1)(i)(B).
99 31 C.F.R. section 1010.380(b)(1)(i)(c). When the reporting company’s principal place of business is in the United States, the street address of the principal place is reported. 31 C.F.R. section 1010.380(b)(1)(i)(C)(1). In all other cases, the street address of the primary location in the United States where the reporting company conducts business is to be used. 31 C.F.R. section 1010.380(b)(1)(i)(C)(2). A P.O. box, or the address of the business or person creating the reporting company or of any other third party, is insufficient.
100 31 C.F.R. section 1010.380(b)(1)(i)(D).
101 31 C.F.R. section 1010.380(b)(1)(i)(E).
102 31 C.F.R. section 1010.380(b)(1)(i)(F).
103 31 U.S.C. section 5336(a)(11); 31 C.F.R. section 1010.380(c)(1).
104 31 U.S.C. section 5336(a)(11)(A)(i); 31 C.F.R. section 1010.380(c)(1)(i). Documents may also be filed with a recognized tribe in section 102 of the Federal Recognized Indian Tribe List Act of 1994 (25 U.S.C. section 5130). 31 U.S.C. section 5336(a)(8).
105 Id. While trusts may file documents with a local court, those filings are not with an office like that of a secretary of state, so in most cases, trusts are not reporting companies.
106 31 U.S.C. section 5336(a)(11)(A)(ii); 31 C.F.R. section 1010.380(c)(1)(ii).
107 31 U.S.C. section 5336(a)(11)(B)(i)-(xxiii).
108 31 C.F.R. section 1010.380(a)(1)(iv).
109 31 U.S.C. section 5336(a)(11)(B)(xxiv).
110 See sections 12 and 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. section 781 and 780(d)). 31 U.S.C. section 5336(a)(11)(B)(i); 31 C.F.R. section 1010.380(c)(2)(i).
111 31 U.S.C. section 5336(a)(11)(B)(ii); 31 C.F.R. section 1010.380(c)(2)(ii).
112 See section 3 of the Federal Deposit Insurance Act (12 U.S.C. section 1813); section 2a of the Investment Company Act of 1940 (15 U.S.C. section 80a-2(a)); and section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. section 80b-2(a)). 31 U.S.C. section 5336(a)(11)(B)(iii); 31 C.F.R. section 1010.380(c)(2)(iii).
113 See section 101 of the Federal Credit Union Act (12 U.S.C. section 1752). 31 U.S.C. section 5336(a)(11)(B)(iv); 31 C.F.R. section 1010.380(c)(2)(iv).
114 Section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. section 1841); section 10(a) of the Home Owner’s Loan Act (12 U.S.C. section 1467a(a)). 31 U.S.C. section 5336(a)(11)(B)(v); 31 C.F.R. section 1010.380(c)(2)(v).
115 See 31 U.S.C. section 5330 and 31 C.F.R. section 1022.380 for registration requirements. 31 U.S.C. section 5336(a)(11)(B)(vi); 31 C.F.R. section 1010.380(c)(2)(vi).
116 Section 3 of the Securities Exchange Act of 1934 (15 U.S.C. section 78c) defines who is a broker or dealer registered under section 15 of that act. 31 U.S.C. section 5336(a)(1)(B)(vii); 31 C.F.R. section 1010.380(c)(2)(vii).
117 An exchange or clearing agency is defined at section 3 of the Securities Exchange Act of 1934 (15 U.S.C. section 78c) and registered under section 6 or 17A of the act (15 U.S.C. section 78f-78q-1). 31 U.S.C. section 5336(a)(11)(B)(viii); 31 C.F.R. section 1010.380(c)(2)(viii).
118 See Securities Exchange Act of 1934 (15 U.S.C. section 78a et seq.). 31 U.S.C. section 5336(a)(11)(B)(ix); 31 C.F.R. section 1010.380(c)(2)(ix).
119 See section 3 of the Investment Company Act of 1940 for the definition of an investment company (15 U.S.C. section 80a-3); and section 202 of the Investment Advisers Act for the definition of an investment adviser (15 U.S.C. section 80b-2). 31 U.S.C. section 5336(a)(11)(B)(x)(I); 31 C.F.R. section 1010.380(c)(2)(x)(A). Registration with the SEC is under the Investment Company Act of 1940 (15 U.S.C. section 80a-1 et seq.) or the Investment Advisers Act of 1940 (15 U.S.C. section 80b-1 et seq.). 31 U.S.C. 5336 section (a)(11)(B)(x)(II); 31 C.F.R. section 1010.380(c)(2)(x)(B).
120 See section 203(l) of the Investment Advisers Act of 1940 (15 U.S.C. section 80b-3(l)). U.S.C. section 5336(a)(11)(B)(xi); 31 C.F.R. section 1010.380(c)(2)(xi). A venture capital adviser files Form ADV (item 10, schedules A and B of part 1A) to register with the SEC. 36 U.S.C. section 5336(a)(11)(B)(xi)(II); 31 C.F.R. section 1010.380(c)(2)(xi)(B).
121 See section 2 of the Investment Company Act of 1940 (15 U.S.C. section 80-a-2). 31 U.S.C. section 5336(a)(11)(B)(xii); 31 C.F.R. section 1010.380(c)(2)(xii).
122 31 U.S.C. section 5336(a)(11)(B)(xiii); 31 C.F.R. section 1010.380(c)(2)(xiii).
123 See the Commodity Exchange Act (7 U.S.C. section 1 et seq.). 31 U.S.C. section 5336(a)(11)(B)(xiv)(II)(bb); 31 C.F.R. section 1010.380(c)(2)(xiv)(A).
124 See section 1a of the Commodity Exchange Act (7 U.S.C. section 1a). 31 U.S.C. section 5336(a)(11)(B)(xiv)(II)(aa)(AA); 31 C.F.R. section 1010.380(c)(2)(xiv)(B)(1).
125 See section 2(c)(2)(B) of the Commodity Exchange Act (7 U.S.C. section 2(c)(2)(B)). 31 U.S.C. section 5336(a)(11)(B)(xiv)(II)(aa)(BB); 31 C.F.R. section 1010.380(c)(2)(xiv)(B)(2).
126 See section 102 of the Sarbanes-Oxley Act (15 U.S.C. section 742). 31 U.S.C. section 5336(a)(11)(B)(xv); 31 C.F.R. section 1010.380(c)(2)(xv).
127 See 26 U.S.C. section 7701(a)(33) for the detailed definition of a regulated public utility. 31 U.S.C. section 5336(a)(11)(B)(xvi); 31 C.F.R. section 1010.380(c)(2)(xvi).
128 See section 804 of the Payment, Clearing and Settlement Supervision Act of 2010 (12 U.S.C. section 5463) (creating the Financial Stability Oversight Council). 31 U.S.C. section 5336(a)(11)(B)(xvii); 31 C.F.R. section 1010.380(c)(2)(xvii).
129 A pooled investment vehicle means an investment company defined in section 3(a) of the Investment Company Act of 1940 (15 U.S.C. section 80a-3(a)) or any company that would be an investment company but for paragraph (1) or (7) of section 3(c) of that act (15 U.S.C. section 80a-3(c)) and is identified or will be identified by its legal name with the SEC. 31 U.S.C. section 5336(a)(11)(B)(xviii); 31 C.F.R. section 1010.380(c)(2)(xviii). While pooled investment vehicles are generally not considered reporting companies, these entities formed under the laws of a foreign country must still report to FinCEN information of the beneficial owner who exercises substantial control over the entity. If more than one individual exercises substantial control, the entity is to report the individual who has the greatest authority over its strategic management. 31 U.S.C. section 5336(a)(11)(B)(xviii); 31 C.F.R. section 1010.380(b)(2)(iii).
130 See 26 U.S.C. section 501(c) for a description of the organizations exempt from federal income tax under 26 U.S.C. section 501(a). 31 U.S.C. section 5336(a)(11)(B)(xix)(I); 31 C.F.R. section 1010.380(c)(2)(xix)(A).
131 See 26 U.S.C. section 527(e)(1) for the definition of political organization. 31 U.S.C. section 5336(a)(11)(B)(xix)(II); 31 C.F.R. section 1010.380(c)(2)(xix)(B).
132 See 26 U.S.C. section 4947(a)(1) and (2) for the definition of charitable and split-interest trusts exempt from reporting. 31 U.S.C. section 5336(a)(11)(B)(xix)(III); 31 C.F.R. section 1010.380(c)(2)(xix)(C).
133 31 U.S.C. section 5336(a)(11)(B)(xx); 31 C.F.R. section 1010.380(c)(2)(xx)(A).
134 31 U.S.C. section 5336(a)(14) refers to 26 U.S.C. section 7701(a), which provides the definition of United States person. See 31 C.F.R. section 1010(f)(10).
135 31 U.S.C. section 5336(a)(11)(B)(xx)(II) and (III); 31 C.F.R. section 1010.380(c)(2)(xx)(B) and (C). See 26 U.S.C. section 7701(b)(6) for the definition of a lawfully admitted resident of the United States. The United States for this purpose includes Native American lands under the Indian Gaming Regulatory Act and territories and insular possessions of the United States. 31 C.F.R. section 1010.100(hhh). In general, to be full time requires 30 hours of work per week. 26 C.F.R. section 54.4980H-1(a)(21). The definition of employee adopts the common law standard in 26 C.F.R. section 31.3401(c)-1(b). See 26 C.F.R. section 54.4980H-1(a)(15). This definition is adopted generally for purposes of 31 U.S.C. section 5336. See 31 C.F.R. section 1010.380(f)(1).
136 31 U.S.C. section 5336(a)(11)(B)(xx)(IV); 31 C.F.R. section 1010.380(c)(2)(xx)(D).
137 U.S.C. section 5336(a)(11)(B)(xxi)(I); 31 C.F.R. section 1010.380(c)(2)(xxi)(A). For this purpose, the term “full-time employees” has the meaning provided in 26 C.F.R. sections 54.4980H-1(a) and -3, and are, in general, individuals employed at least 30 hours per week for each calendar month. 26 C.F.R. sections 54.4980H-1(a)(21)(i) and 54.4980H-3(d)(1)(iii). The definition of employee adopts the common law standard in 26 C.F.R. section 31.3401(c)-1(b). See 26 C.F.R. section 54.4980H-1(a)(15). This definition is adopted generally for purposes of 31 U.S.C. section 5336. See 31 C.F.R. section 1010.380(f)(1).
138 Gross income (gross receipts or sales net of returns and allowances) is the income reported on the entity’s tax return — form 1120, 1120-S, or 1065, or another applicable IRS form — including income of entities owned by the entity and entities through which the entity operates, excluding income from sources outside the United States as provided in 26 U.S.C. section 861 et seq. For an entity that is part of an affiliated group of corporations under 26 U.S.C. section 1504 filing a consolidated return, the consolidated income of the group is treated as the income of the entity. 31 U.S.C. section 5336(a)(11)(B)(xxi)(II); 31 C.F.R. section 1010.380(c)(2)(xxi)(C).
139 31 U.S.C. section 5336(a)(11)(B)(xxi)(III); 31 C.F.R. section 1010.380(c)(2)(xxi)(B). An operating presence at a physical office in the United States requires the entity to regularly conduct its business at a physical location in the United States that the entity owns or leases and that is physically distinct from the place of business of any unaffiliated entity. 31 C.F.R. section 1010.380(f)(6). The United States includes the District of Columbia, all U.S. territories, and Native American lands under the Indian Gaming Regulatory Act. 31 C.F.R. section 1010.100(hhh).
140 31 U.S.C. section 5336(a)(11)(B)(xxii); 31 C.F.R. section 1010.380(c)(2)(xxii). A foreign person is defined as a person who is not a U.S. person under 26 U.S.C. section 7701(a)(30). 31 U.S.C. section 5336(a)(7) and (14); 31 C.F.R. section 1010.380(f)(3) and (10).
141 31 U.S.C. section 5336(a)(11)(B)(xxiii); 31 C.F.R. section 1010.380(c)(2)(xxiii). Determining an entity’s inactivity will require contacting persons who own the reporting company to obtain information regarding its operations, revenue, and expenditures.
142 31 U.S.C. section 5336(h)(1) and (3)(A). Willfully for this purpose is the voluntary, intentional violation of a known legal duty. 31 U.S.C. section 5336(h)(6).
143 31 U.S.C. section 3556(h)(2) and (3)(B). If the disclosure or use is in connection with the violation of another U.S. law or is part of a pattern of illegal activity involving more than $100,000 in a 12-month period, the penalties are up to $500,000 in fines and up to 10 years’ imprisonment.
144 31 U.S.C. section 5336(h)(3)(C)(i). The penalty will not be excused if, at the initial submission of the report, the person intended to evade reporting requirements and had actual knowledge of its inaccuracy. 31 U.S.C. section 5336(h)(3)(i)(II).
145 31 C.F.R. section 1010.380(g)(1) and (3).
146 31 C.F.R. section 1010.380(g)(4)(iii).
147 31 C.F.R. section 1010.380(f)(8).
148 31 U.S.C. section 5336(c)(2)(B)(i). In the case of a state agency, a court must authorize the request. 31 U.S.C. section 5336(c)(2)(B)(i)(II).
149 31 U.S.C. section 5336(c)(2)(B)(ii). A request may also be made by prosecutors in “trusted” foreign countries that do not have a treaty with the United States.
150 31 U.S.C. section 5336(c)(2)(B)(iii).
151 31 U.S.C. section 5336(c)(2).
152 31 U.S.C. section 5336(c)(8) directs FinCEN to establish security protection commensurate with the congressionally mandated, comprehensive information security measures applicable to all federal agencies. See 44 U.S.C. section 3551 et seq.
153 87 F.R. 59547.
154 31 C.F.R. section 1010.380(b). 31 U.S.C. section 5336(h)(4) calls for regulations to prescribe the procedures for filing.
155 The preamble to the regulations states that the certification requirement will mirror that in Form 8300, “Report of Cash Payments Over $10,000 in a Trade or Business,” which provides: “Under penalties of perjury, I declare that to the best of my knowledge the information I have furnished above is true, correct and complete.” 87 F.R. 59514.
156 31 U.S.C. section 5336(f).
157 31 U.S.C. section 5336(j).
158 See 31 U.S.C. section 5336(b)(1)(B) and (C).
END FOOTNOTES