Blog Series: What Should Your Bank Know About the CTA?

On January 1, 2024, the Corporate Transparency Act will require millions of U.S. companies to file first-time beneficial ownership information reports with the U.S. Department of Treasury Financial Crimes Enforcement Network. Over the last several weeks, Dickinson Law has covered some of the most significant reporting obligations as well as what businesses, financial institutions, and existing entities need to know about the changes. 

Beginning January 1, 2024, certain companies that meet the definition of a “reporting company” under the Beneficial Ownership Information Reporting Rule (the “Reporting Rule”) will be required to file beneficial ownership information reports with the United States Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”).

Although banks and bank holding companies fall under certain exemptions to the definition of a reporting company and will not have to file beneficial ownership information reports to FinCEN, financial institutions should still be aware of the nuts and bolts of this rule. Why? Financial institutions will be granted access to these reports to conduct customer due diligence requirements including those under the Banking Secrecy Act or USA PATRIOT Act. Financial institutions will be able to confirm the beneficial ownership information provided directly to such institution to facilitate the compliance with anti-money laundering, financing of terrorism, and customer due diligence requirements. The caveat is that banks will have to receive consent from the reporting company to review the submitted information.

Unfortunately, there is little guidance released to date to help shed light on what this access will look like, how consent can be obtained, when access will be granted, and what requirements or limitations may be placed on financial institutions once they have access to such information. FinCEN is still developing the rules that will govern any access to the beneficial ownership information and has stated that they will work to ensure that those authorized to access the beneficial ownership information will handle the information responsibly to protect its security and confidentiality, and will only use the beneficial ownership information for its authorized purposes.  

NOTE: The Reporting Rule and the guidance surrounding the rule is constantly evolving. For example, FinCEN has now extended the deadline to file initial beneficial ownership information reports from 30 to 90 calendar days for companies created in 2024. For questions about the latest updates, please reach out to your legal representatives.