News Detail

FinCEN Publishes Second Beneficial Ownership Rule With SWACCA-Advocated Provisions Regarding Access to Beneficial Ownership Information Reported to FinCEN

The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) published its second rulemaking to implement the beneficial ownership requirements of the Corporate Transparency Act (CTA).

As you may recall, SWACCA submitted comments in May 2021 on FinCEN’s Advanced Notice of Proposed Rulemaking (ANPRM) entitled, “Beneficial Ownership Reporting Requirements.” In those comments, SWACCA restated the position it has consistently lobbied that FinCEN should allow federal, state and local enforcement agencies to use beneficial ownership information it collects to investigate serious tax and payroll fraud associated with the misclassification of workers in the construction industry. SWACCA has consistently urged FinCEN to do this as it developed today’s rule. We are pleased to report that FinCEN’s proposed rule is responsive to our advocacy insofar as it allows federal, state, local or Tribal law enforcement agencies to obtain beneficial ownership information (BOI) on who controls an LLC in both criminal and civil proceedings. In addition, today’s proposed rule also authorizes FinCEN to re-disclose BOI more generally in “appropriate circumstances.” For example, FinCEN notes that re-disclosure is allowed when it is necessary for one law enforcement agency to disclose this information to another agency for an authorized purpose like combatting illicit activity, including tax fraud, money laundering, and corruption, among others.

Providing access to BOI for federal and state regulatory agencies to pursue both criminals and civil tax violations arising from misclassification will speed the ability of enforcement personnel to ascertain the individuals behind a chain of companies set up to make it hard to determine the owner who should face liability for misclassification.  

Comments on this proposed rule are due by February 14, 2023 and can be submitted here using Docket ID FINCEN-2021-0005 and RIN 1506-AB49/AB59. FinCEN is proposing that the effective date of any final rule, once issued, would be January 1, 2024.

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