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Ian Herbert Comments on New Regulations for Beneficial Ownership Reporting in Law360

"Ownership Transparency Rules May Bring Growing Pains"


Ian Herbert discussed how the new regulations regarding beneficial ownership reporting will require U.S. companies to make judgement calls about what information to report to the Financial Crimes Enforcement Network (FinCEN). FinCEN has said that the regulations, which are supposed to shine light on shell companies, attempt to minimize the burden on companies while ensuring the information collected is "accurate, complete and highly useful" for combatting illicit finance. The database is required under the Corporate Transparency Act (CTA), which Congress enacted in early 2021. In December, FinCEN issued a notice of proposed rulemaking laying out the proposed requirements for reporting beneficial ownership to FinCEN, which Herbert previously wrote about here. The proposed rule, however, could give businesses administrative headaches as they report information to the Treasury's financial crimes unit. "There will be some compliance difficulties at the beginning with companies trying to grapple with how to make that determination," Herbert said. "This is not going to be impossible for companies to manage . . . [however] "in terms of balancing the burdens, there are some areas where the rule is going to make it so that there are significant burdens on companies to stay in compliance."