On December 22, 2023, the Financial Crimes Enforcement Network (FinCEN) issued a final rule (the Access Rule) that sets forth the circumstances under which beneficial ownership information (BOI) may be disclosed to authorized BOI recipients.
The CTA allows FinCEN to disclose BOI only to six categories of requestors. The Access Rule, among other things, clarifies the purposes for which these requestors may use BOI, the steps they must take in making their request, and the steps they must take to ensure the security and confidentiality of the information.
Highlights from the Access Rule include the following:
- Federal government agency access to BOI. FinCEN may disclose BOI to Federal agencies engaged in national security, intelligence, or law enforcement activity if the requested BOI is for use in furtherance of such activity. The agency must certify it is engaged in one of those activities (each of which is defined in the Access Rule) and provide the reasons the requested BOI is relevant to the activity.
- State, local, and Tribal law enforcement agency access to BOI. FinCEN may disclose BOI to State, local, and Tribal law enforcement agencies if a court of competent jurisdiction has authorized it to seek the information in a criminal or civil investigation. The agencies must certify they have received such authorization and that the requested BOI is relevant to the investigation.
- Foreign requesters. FinCEN may disclose BOI information to a Federal agency for transmission to a foreign law enforcement agency, prosecutor, judge, foreign central authority, or foreign competent authority who initiated the request, provided that the request is for assistance in a law enforcement investigation or prosecution, or for a national security or intelligence activity authorized under the laws of the foreign country, and the request is made under an international treaty, agreement, or convention; or if no treaty, agreement or convention is available, as an official request determined to be from a trusted foreign country.
- To access BOI. Domestic agencies must satisfy several security and confidentiality requirements outlined in the Access Rule, including establishing standards and procedures to protect the security and confidentiality of BOI, establishing and maintaining a secure system in which to store BOI, and conducting an annual audit to verify appropriate use of BOI.
- Financial institutions subject to customer due diligence requirements. FinCEN may disclose BOI to financial institutions using BOI to facilitate compliance with customer due diligence requirements under applicable law, provided that before making the request they have obtained and documented the reporting company’s consent. The Access Rule defines “customer due diligence requirements under applicable law” to include “any legal requirement or prohibition designed to counter money laundering or the financing of terrorism, or to safeguard the national security of the United States, to comply with which it is reasonably necessary for a financial institution to obtain or verify beneficial ownership information of a legal entity customer.”
- Federal functional regulators and other appropriate regulatory agencies. FinCEN may disclose BOI to Federal functional regulators and other appropriate regulatory agencies acting in a supervisory capacity assessing financial institutions for compliance with customer due diligence requirements.
- Treasury personnel. BOI is available to any Treasury Department officer or employee (1) whose official duties require BOI inspection or disclosure, or (2) for tax administration. The Treasury Department will establish internal policies and procedures governing Treasury officer and employee access to BOI.
- Financial institutions must develop and implement administrative, technical, and physical safeguards reasonably designed to protect the information.
- Authorized BOI recipients are prohibited from re-disclosing BOI except in certain specific circumstances, including re-disclosures within the same recipient, or to courts of competent jurisdiction or prosecutors for use in litigation related to the activity for which the requesting agency requested the information. FinCEN may also authorize the re-disclosure of BOI by an authorized recipient in other situations, so long as the re-disclosure is for an authorized purpose.
The Access Rule will be effective February 20, 2024. However, the effective date of the Reporting Rule remains January 1, 2024. FinCEN will take a phased approach to providing access to the beneficial ownership IT system from which authorized users may obtain BOI.
- The first stage will be a pilot program for a handful of key Federal agency users starting in 2024.
- The second stage will extend access to Treasury Department offices and certain Federal agencies engaged in law enforcement and national security activities.
- Subsequent stages will extend access to additional Federal agencies engaged in law enforcement, national security, and intelligence activities, as well as to key State, local, and Tribal law enforcement partners; to intermediary Federal agencies in connection with foreign government requests; and finally, to financial institutions and their supervisors.