The US Treasury Financial Crimes Enforcement Network (FinCEN) on December 7 issued proposed rules to implement beneficial ownership reporting requirements. The rules aim to “impede malign actors from abusing legal entities, like shell companies, to conceal proceeds of corrupt and criminal acts.”
The targeted illicit activities include tax fraud and evasion, as well corruption, money laundering, terrorist financing, and other illicit activity.
Entities will be required to submit beneficial ownership information to FinCEN and make the information accessible to law enforcement, financial institutions, and other authorized users.
The proposed rules implement the Corporate Transparency Act enacted in January, which established the beneficial owner reporting requirements for corporations and certain other entities that are created in or registered to do business in the US.
The new rules specify who must report beneficial ownership information, when they must report it, and what information they must provide. In addition to beneficial owners (i.e., individuals with “substantial control” or a 25% or more ownership interest), the rules would require reporting with respect to individuals who filed an application to form the entity or to register it to do business in the US.
Comments on the rules will be accepted until February 7, 2022.
Good move by the US IRS to see that only bonafide transactions get the right benefit entitled under the tax code.