Proposed Rule2023-21226
Beneficial Ownership Information Reporting Deadline Extension for Reporting Companies Created or Registered in 2024
Primary source
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Published
September 28, 2023
Issuing agencies
Treasury DepartmentFinancial Crimes Enforcement Network
Abstract
FinCEN is proposing to amend the beneficial ownership information (BOI) reporting rule (Reporting Rule) to extend the filing deadline for certain BOI reports. Under the Reporting Rule, entities created or registered on or after the rule's effective date of January 1, 2024, must file initial BOI reports with FinCEN within 30 days of notice of their creation or registration. This proposed amendment would extend that filing deadline from 30 days to 90 days for entities created or registered on or after January 1, 2024, and before January 1, 2025, to give those entities additional time to understand the new reporting obligation and collect the necessary information to complete the filing. Entities created or registered on or after January 1, 2025, would have 30 days to file their BOI reports with FinCEN, as required under the Reporting Rule.
Full Text
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<title>Federal Register, Volume 88 Issue 187 (Thursday, September 28, 2023)</title>
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[Federal Register Volume 88, Number 187 (Thursday, September 28, 2023)]
[Proposed Rules]
[Pages 66730-66732]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-21226]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1010
RIN 1506-AB62
Beneficial Ownership Information Reporting Deadline Extension for
Reporting Companies Created or Registered in 2024
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Notice of Proposed Rulemaking (NPRM).
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SUMMARY: FinCEN is proposing to amend the beneficial ownership
information (BOI) reporting rule (Reporting Rule) to extend the filing
deadline for certain BOI reports. Under the Reporting Rule, entities
created or registered on or after the rule's effective date of January
1, 2024, must file initial BOI reports with FinCEN within 30 days of
notice of their creation or registration. This proposed amendment would
extend that filing deadline from 30 days to 90 days for entities
created or registered on or after January 1, 2024, and before January
1, 2025, to give those entities additional time to understand the new
reporting obligation and collect the necessary information to complete
the filing. Entities created or registered on or after January 1, 2025,
would have 30 days to file their BOI reports with FinCEN, as required
under the Reporting Rule.
DATES: Written comments on this proposed rule may be submitted on or
before October 30, 2023.
ADDRESSES: Comments may be submitted by any of the following methods:
<bullet> Federal E-rulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments. Refer to Docket Number
FINCEN-2023-0014 and the Office of Management and Budget (OMB) control
number 1506-0076.
<bullet> Mail: Policy Division, Financial Crimes Enforcement
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2023-0014 and OMB control number 1506-0076.
FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Support Section
at 1-800-767-2825 or electronically at <a href="/cdn-cgi/l/email-protection#90f6e2f3d0f6f9fef3f5febef7ffe6"><span class="__cf_email__" data-cfemail="4c2a3e2f0c2a25222f2922622b233a">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Introduction
In this NPRM, FinCEN is proposing to amend the Reporting Rule \1\
to extend the deadline to file initial BOI reports for entities created
or registered on or after the rule's effective date of January 1, 2024,
and before January 1, 2025. Under the Reporting Rule, such entities
must file initial BOI reports with FinCEN within 30 days of notice of
their creation or registration. The proposed amendment would extend
that filing deadline from 30 days to 90 days for entities created or
registered on or after January 1, 2024, and before January 1, 2025, to
give those entities additional time to understand the new reporting
obligation and collect the necessary information to complete their
filings. Entities created or registered on or after January 1, 2025,
would have 30 days to file their BOI reports with FinCEN, as required
under the Reporting Rule.
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\1\ Treasury, FinCEN, Beneficial Ownership Information Reporting
Requirements, 87 FR 59498 (Sept. 30, 2022).
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II. Background
On September 30, 2022, FinCEN published the Reporting Rule, with an
effective date of January 1, 2024.\2\ The Reporting Rule requires
certain corporations, limited liability companies, and other similar
entities (``reporting companies'') \3\ to report certain identifying
information about the beneficial owners who own or control such
entities and the company applicants who form or register them.\4\ These
requirements are intended to facilitate access to BOI for certain
authorized recipients, including law enforcement and regulators, for
the purpose of countering money laundering, the financing of terrorism,
and other illicit activity.\5\ The Corporate Transparency Act (CTA)
directs FinCEN to promulgate regulations that achieve the objectives of
the statute, while minimizing burdens on reporting companies to the
greatest extent practicable and ensuring that the BOI collected is
``highly useful'' for national security, intelligence, and law
enforcement activities.\6\
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\2\ The Reporting Rule is the first in a series of rulemakings
to implement the CTA, enacted on January 1, 2021, as part of the
Anti-Money Laundering Act of 2020 and codified at 31 U.S.C. 5336.
The CTA is Title LXIV of the William M. (Mac) Thornberry National
Defense Authorization Act for Fiscal Year 2021, Public Law 116-283
(Jan. 1, 2021) (the NDAA). Division F of the NDAA is the Anti-Money
Laundering Act of 2020, which includes the CTA.
\3\ See 31 U.S.C. 5336(a)(11).
\4\ See U.S. Department of the Treasury (Treasury), FinCEN,
Beneficial Ownership Information Reporting Requirements, 87 FR
59498, 59498-99 (Sept. 30, 2022).
\5\ Public Law 116-283, Section 6402 (Jan. 1, 2021).
\6\ Id.
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The Reporting Rule requires reporting companies to report to FinCEN
within prescribed time periods information about themselves, as well as
information about two categories of individuals: (1) the beneficial
owners of the reporting company; and (2) the company applicants, who
are the individuals who filed a document to create the reporting
company or register it to do business. For a domestic or foreign
reporting company created or registered to do business in the United
States before the rule's effective date of January 1, 2024, an initial
BOI report must be filed by January 1, 2025.\7\ For a reporting company
created or registered on or after January 1, 2024, however, the
Reporting Rule requires that an initial BOI report must be filed within
30 days of the earlier of the date on which it receives actual notice
or public notice that it has been created or registered.\8\
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\7\ 31 CFR 1010.380(a)(iii).
\8\ 31 CFR 1010.380(a)(i)-(ii).
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III. Proposed Extension of Time for Certain Reporting Companies
FinCEN proposes to extend the period for certain reporting
companies to file initial BOI reports. Under this proposed amendment to
the Reporting Rule, reporting companies created or registered on or
after January 1, 2024, and before January 1, 2025, would have 90 days
to submit their initial BOI
[[Page 66731]]
reports, instead of 30 days.\9\ Reporting companies formed on or after
January 1, 2025, would continue to be required to submit their initial
BOI reports within 30 days.
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\9\ CTA, Section 6402(8)(a).
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In the preamble to the Reporting Rule, FinCEN explained its
expectation that a 30-day timeframe for initial reports would provide
sufficient time for reporting companies to resolve various issues after
initial creation, including obtaining necessary information and
identifying their beneficial owners with sufficient time to file an
initial report.\10\ Upon continued dialogue with partners in the
private sector, including trade associations, non-profits, and other
key stakeholder organizations, FinCEN believes that extending the
deadline for reporting companies created or registered on or after
January 1, 2024, and before January 1, 2025, to file an initial BOI
report from 30 to 90 days will have multiple benefits.\11\
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\10\ Treasury, FinCEN, Beneficial Ownership Information
Reporting Requirements, 87 FR 59498, 59511 (Sept. 30, 2022).
\11\ Although the CTA provides that reports are to be filed by
entities created or registered on or after January 1, 2024 ``at the
time of formation or registration,'' FinCEN may prescribe an
exemption from that requirement consistent with the directive to
ensure that the database is highly useful to law enforcement while
at the same time minimizing burdens on reporting companies. FinCEN
believes it is appropriate to do so for entities created or
registered on or after January 1, 2024 and before January 1, 2025
for the reasons explained below. See 31 U.S.C. 5336(b)(1)(C). Under
31 U.S.C. 5318(a)(7), FinCEN has authority to ``prescribe an
appropriate exemption from a requirement under this subchapter,''
which includes the CTA in section 5336.
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First, this extension will increase the time available for these
entities to understand and comply with their new regulatory obligations
under the Reporting Rule. FinCEN recognizes that there are many aspects
of the Reporting Rule that newly created or registered entities will
need to navigate, including whether the new legal entity falls under
the definition of ``reporting company'' or qualifies for an exemption,
the meaning of ``beneficial owner'' under the rule, and the application
of other key terms and requirements. FinCEN is developing simple, easy-
to-read guidance and educational materials such as frequently asked
questions (FAQs), videos, infographics, and compliance guides to help
reporting companies comply with the new rules. FinCEN published initial
guidance and educational materials on March 24, 2023, and a Small
Entity Compliance Guide on September 18, 2023. FinCEN aims to publish
additional materials in the near future. Additionally, FinCEN continues
to conduct extensive outreach to ensure that all stakeholders
understand their obligations and how best to seek assistance to have
their questions answered. Yet FinCEN recognizes the novelty of the BOI
reporting requirement and the need to provide filers, many of which are
interfacing with FinCEN for the first time, particular consideration
when it comes to the reporting deadline for entities created or
registered in 2024.
Second, the extension will provide new reporting companies
additional time to obtain the information necessary to complete their
initial BOI reports. The Reporting Rule requires reporting companies to
obtain and report certain BOI to FinCEN. At the outset of the
implementation of the rule, making and responding to requests for BOI
will be an unfamiliar exercise for many new companies or third-party
service providers, and beneficial owners. FinCEN recognizes that
additional time could greatly benefit these parties, particularly those
who have not interacted with FinCEN before.\12\
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\12\ See Reporting Rule, 31 CFR 1010.380(b)(1)(i).
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Furthermore, the extension will give reporting companies more time
to resolve questions that may arise in the process of completing their
initial BOI reports. FinCEN continues to work actively to develop and
issue guidance and educational materials such as FAQs, videos,
infographics, and compliance guides to help reporting companies
complete and submit their BOI reports to FinCEN. FinCEN also continues
to engage in extensive outreach to ensure that stakeholders are able to
submit BOI reports in a streamlined and efficient manner. Reporting
companies and other stakeholders may want more time to become familiar
with these guidance and educational materials given the new obligations
and reporting timeframes. In addition, reporting companies may wish to
consult with a third-party service provider such as an accountant or
lawyer, or to contact FinCEN with an inquiry. FinCEN aims to establish
a contact center prior to January 1, 2024, to field questions about the
BOI reporting requirements from reporting companies and other
stakeholders. Extending the reporting deadline from 30 to 90 days will
allow all parties additional time to resolve questions about the new
reporting requirements. It will also help FinCEN manage the volume of
contact center inquiries and provide more comprehensive customer
service by giving reporting companies and other stakeholders more time
to consult guidance materials and internally resolve questions about
the new requirements.
The proposed extension to 90 days would apply to both domestic and
foreign entities created or registered in the United States in the
first year after the Reporting Rule becomes effective, but entities
created or registered on or after January 1, 2025, would remain subject
to the 30-day deadline established in the Reporting Rule. FinCEN
believes that extending the time period in the first year is
appropriate because of the novelty of the beneficial ownership
reporting regime created by Congress under the CTA. For the first time,
the United States is now requiring legal entities to submit beneficial
ownership information to a centralized, Federal Government database,
and the reporting requirements are likely to be entirely new to
business owners, corporate formation professionals, secretary of state
offices, and other key stakeholders. After January 1, 2025, however,
FinCEN expects that the BOI reporting requirements will be more
familiar to those involved in corporate formation, and newly created or
registered companies should be in a better position to promptly file
their BOI reports.
Although FinCEN believes that providing this additional time and
flexibility for reporting companies created or registered in 2024 to
file their initial BOI reports will benefit reporting companies and
their service providers, FinCEN recognizes that the extension could
cause a delay in submissions to the BOI database in the first year of
its operation. For example, under the proposed rule, if entities are
created or registered on December 31, 2024, they would have until April
1, 2025 (90 days after December 31, 2024) to submit their initial BOI
reports. In contrast, under the Reporting Rule, law enforcement could
expect all compliant reporting companies created or registered on or
before December 31, 2024, to have submitted their initial BOI reports
by January 30, 2025 (30 days after December 31, 2024). With all of that
taken into account, FinCEN still believes that the potential adverse
effects of any such delay in the first year of the program are
outweighed by the relief they will provide for small businesses, as
explained above. FinCEN solicits comment on this assessment, and on
whether there are any other potential consequences of the extension
that it has not identified.
IV. Regulatory Analysis
FinCEN has analyzed the proposed rule as required under Executive
Orders 12866, 13563, and 14094; the Regulatory
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Flexibility Act; the Unfunded Mandates Reform Act; and the Paperwork
Reduction Act. This proposed rule would not have an annual effect on
the economy of $200 million or otherwise constitute a ``significant
regulatory action'' as defined in section 3(f) of Executive Order
12866, as amended. Pursuant to the Regulatory Flexibility Act, FinCEN
certifies that the proposed rule would not have a significant economic
impact on a substantial number of small entities. FinCEN assessed that
this proposed rule would result in no additional costs to small
businesses. Furthermore, pursuant to the Unfunded Mandates Reform Act,
FinCEN has concluded that the proposed rule would not result in an
expenditure of $177 million or more annually by state, local, and
Tribal governments or by the private sector.\13\ FinCEN does not
estimate any burden, as defined by the Paperwork Reduction Act,
associated with the proposed rule.
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\13\ The Unfunded Mandates Reform Act requires an assessment of
mandates that will result in an annual expenditure of $100 million
or more, adjusted for inflation. The U.S. Bureau of Economic
Analysis reports the annual value of the gross domestic product
(GDP) deflator in 1995, the year of the Unfunded Mandates Reform
Act, as 71.823, and as 127.224 in 2022. See U.S. Bureau of Economic
Analysis, ``Table 1.1.9. Implicit Price Deflators for Gross Domestic
Product'' (accessed Friday, June 2, 2023). Thus, the inflation
adjusted estimate for $100 million is 127.224/71.823 x 100 = $177
million.
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FinCEN assesses that the extension of the reporting deadline for
entities created or registered in the first year of the reporting
requirement will not impose new costs. The costs for BOI reporting have
been estimated in the regulatory impact analysis (RIA) in the Reporting
Rule.\14\ In that RIA, FinCEN estimated the total number of reporting
companies in 2024, the first year that the Reporting Rule will go into
effect, to be approximately 32.6 million. The Reporting Rule RIA also
estimated the costs for these reporting companies in filing their
initial BOI reports, analyzing the potential cost of each step in the
filing process.\15\ FinCEN's analysis in the final Reporting Rule would
not be changed by an extension of the reporting timeline for new
reporting companies created or registered in 2024 from 30 days to 90
days.
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\14\ See Treasury, FinCEN, Beneficial Ownership Reporting
Requirements, 87 FR 59549-59591 (Dec. 8, 2021).
\15\ Id.
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FinCEN acknowledges that this change would shift some of the
estimated aggregate cost in the Reporting Rule RIA from ``Year 1''
(2024) to ``Year 2'' (2025) in the analysis. This shift in cost is
difficult to quantify. However, FinCEN assesses that the shift of these
costs would be de minimis and would not change the conclusions of the
Reporting Rule's RIA. Additionally, the per-reporting company burden
and cost estimate in the Reporting Rule RIA would not be affected by
this proposed change.
Furthermore, as discussed in Section III, FinCEN notes that the
proposed change in the reporting timeline for reporting companies
created or registered in 2024 would likely have multiple benefits.
These benefits include additional time for these reporting companies to
understand and comply with the requirements of the Reporting Rule as
well as greater opportunities for FinCEN to efficiently respond to
questions and address problems that reporting companies may have in
complying. FinCEN invites comment on whether the proposed rule may
provide for other benefits to reporting companies, their service
providers, or other stakeholders. FinCEN also solicits comments on
whether any aspects of this proposed rule would result in cost or
burden, or whether the proposed rule would affect the estimate of the
cost, burden, and impact of the Reporting Rule in the Reporting Rule's
RIA.
Proposed Regulatory Text
List of Subjects in 31 CFR Part 1010
Administrative practice and procedure, Aliens, Authority
delegations (Government agencies), Banks and banking, Brokers, Business
and industry, Citizenship and naturalization, Commodity futures, Crime,
Currency, Electronic filing, Federal savings associations, Federal-
States relations, Foreign persons, Holding companies, Indians, Indian--
law, Indians--tribal government, Insurance companies, Investigations,
Investment advisors, Investment companies, Law enforcement, Penalties,
Reporting and recordkeeping requirements, Securities, Small business,
Terrorism, Time.
For the reasons set forth in SUPPLEMENTARY INFORMATION, FinCEN
proposes to amend part 1010 of chapter X of title 31 of the Code of
Federal Regulations, as amended September 30, 2022, at 87 FR 59498,
effective January 1, 2024, as follows:
PART 1010--GENERAL PROVISIONS
0
1. The authority citation for part 1010 continues to read as follows:
Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314
and 5316-5336; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307;
sec. 2006, Pub. L. 114-41, 129 Stat. 458-459; sec. 701, Pub. L. 114-
74, 129 Stat. 599.
0
2. In Sec. 1010.380, revise (a)(1)(i)-(ii) to read as follows:
Sec. 1010.380 Reports of beneficial ownership information.
(a) Reports required; timing of reports--
(1) Initial report. Each reporting company shall file an initial
report in the form and manner specified in paragraph (b) of this
section as follows:
(i) (A) Any domestic reporting company created on or after January
1, 2024, and before January 1, 2025, shall file a report within 90
calendar days of the earlier of the date on which it receives actual
notice that its creation has become effective or the date on which a
secretary of state or similar office first provides public notice, such
as through a publicly accessible registry, that the domestic reporting
company has been created.
(B) Any domestic reporting company created on or after January 1,
2025, shall file a report within 30 calendar days of the earlier of the
date on which it receives actual notice that its creation has become
effective or the date on which a secretary of state or similar office
first provides public notice, such as through a publicly accessible
registry, that the domestic reporting company has been created.
(ii) (A) Any entity that becomes a foreign reporting company on or
after January 1, 2024, and before January 1, 2025, shall file a report
within 90 calendar days of the earlier of the date on which it receives
actual notice that it has been registered to do business or the date on
which a secretary of state or similar office first provides public
notice, such as through a publicly accessible registry, that the
foreign reporting company has been registered to do business.
(B) Any entity that becomes a foreign reporting company on or after
January 1, 2025, shall file a report within 30 calendar days of the
earlier of the date on which it receives actual notice that it has been
registered to do business or the date on which a secretary of state or
similar office first provides public notice, such as through a publicly
accessible registry, that the foreign reporting company has been
registered to do business.
Andrea M. Gacki,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2023-21226 Filed 9-27-23; 8:45 am]
BILLING CODE P
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