On November 8, 2023, the Financial Crimes Enforcement Network (FinCEN) issued a final rule to specify the circumstances in which a reporting company may report an entity’s FinCEN Identifier in lieu of the information about an individual beneficial owner. This final rule amends FinCEN's Beneficial Ownership Information Reporting Requirements Rule (Final Reporting Rule) issued on September 30, 2022, which implements the reporting requirements of the Corporate Transparency Act (CTA).
What is a FinCEN Identifier?
A FinCEN Identifier is a unique identifying number that FinCEN will issue upon request to individuals who have provided FinCEN with their beneficial ownership information (BOI) and to reporting companies that have filed an initial BOI report. The Final Reporting Rule finalized use of the FinCEN Identifier by individuals, but not by entities. On November 8, 2023, FinCEN published in the Federal Register the final entity FinCEN Identifier rule, finalizing the use of FinCEN Identifiers obtained by entities. No changes were made to the Final Reporting Rule’s provision regarding the use of FinCEN Identifiers obtained by individuals.
When can an entity’s FinCEN Identifier be used by a reporting company?
The final entity FinCEN Identifier rule provides that a reporting company may report another entity’s FinCEN Identifier and full legal name in lieu of the information required with respect to the beneficial owners of the reporting company (e.g., legal name, date of birth, residential address, unique number and issuing jurisdiction from a driver’s license, passport, or other acceptable document, and an image of the document) only if:
(1) The other entity has obtained a FinCEN Identifier and provided that FinCEN Identifier to the reporting company;
(2) An individual is or may be a beneficial owner of the reporting company by virtue of an interest in the reporting company that the individual holds through an ownership interest in the other entity; and
(3) The beneficial owners of the other entity and of the reporting company are the same individuals.
Does FinCEN include any comments to help explain this rule?
The Supplementary Information which accompanies the text of the final entity FinCEN Identifier rule contains some comments from FinCEN that may be helpful in understanding when a reporting company may report an entity’s FinCEN Identifier. These include the following:
- FinCEN's understanding is that use of the entity FinCEN Identifier would best satisfy the CTA's overall statutory scheme—in which reporting the intermediate entity's FinCEN Identifier would be equivalent to reporting the BOI of the reporting company's beneficial owners—only if the two entities in fact had the same beneficial owners.
- FinCEN wanted to make clear that it is an individual's ownership interest in another entity that allows the reporting company to report the other entity's FinCEN Identifier in lieu of the individual's information.
- FinCEN chose not to remove the regulatory text that allows use of an entity FinCEN Identifier if a beneficial owner of the entity “may be” a beneficial owner of the reporting company by virtue of an interest held in an intermediate entity, to give effect to the principle that a reporting company should be able to report an entity FinCEN identifier when it has a good faith belief that the use is appropriate.
- FinCEN declined to more specifically address the requirement that a reporting company update its BOI report if the beneficial owners of the entity whose entity FinCEN Identifier the reporting company has previously reported cease to be the same as the beneficial owners of the reporting company. FinCEN believes that it is already sufficiently clear that if at any time the reportable beneficial owners of either the reporting company or the entity whose FinCEN identifier was reported changes such that the two are no longer identical, then the reporting company must file an update.
The entity FinCEN Identifier final rule will be effective January 1, 2024, which is also the effective date of the Final Reporting Rule. The entity FinCEN Identifier final rule can be viewed here https://www.govinfo.gov/content/pkg/FR-2023-11-08/pdf/2023-24559.pdf
Learn more from CT Corporation
To learn more about how CT Corporation can help, contact a CT Corporation service representative or visit our Corporate Transparency Act resource page where you can sign up for updates.
And take the quiz to help determine your Beneficial Ownership Information filing status.
