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On the Way to a National Beneficial Ownership Registry?

Abrigo
July 17, 2018
Read Time: 0 min

Treasury Secretary Mnuchin wants a beneficial ownership registry within the next six months. 

[An update to the Financial Reporting Threshold Modernization Act (H.R. 6850) was introduced on September 20 and removed the suggestion of a Beneficial Ownership registry.]

As you well know, beneficial ownership information is now required to be collected by every financial institution for those with at least a 25% stake in a company when a relationship begins.

Now Treasury Secretary Steven Mnuchin is hoping to make your job a lot easier by creating a national beneficial ownership registry within the next six months through legislation. The thought behind this is to give law enforcement access to this information to help stop money laundering and financial crimes in the United States.

Currently, law enforcement can access beneficial ownership information that is gathered by financial institutions through those institutions, but it adds an unnecessary extra step and potential time delays to financial crime investigations. With the new legislation, beneficial ownership information would be filed with the government when a corporation is formed, not when/if they open a bank account.

The goal of this new legislative change is to do what the beneficial ownership rule does, but at a legal level: crack down on shell companies that assist in money laundering and the financing of terrorist activities, among other illegal actions. With its lax laws on corporations, the U.S. is widely viewed as a global tax haven and Mnuchin is looking to change that.

Before you break out into a cold sweat thinking about having to do more work around beneficial ownership, this law wouldn’t seem to add any additional work on to BSA officers or financial institutions. If anything, it should make your jobs easier by requiring the collection of beneficial ownership information at a national level and having that information on file before they even step foot in your financial institution. That’s not to say you will be able to ease up on collecting that information, but you may not get as much pushback from your customers/members when you collect it.

Having this information in a national registry would allow BSA Officers to verify the information being provided on the certification form when onboarding a new relationship. It would also help in your enhanced due diligence efforts. BSA Officers would be able to do queries to see if beneficial ownership information has changed instead of being left in the dark until the customer lets you or your financial institution know.

Before you get too excited, it’s worth noting that lawmakers have tried to pass similar legislation for decades. However, with FinCEN’s new beneficial ownership rule finally going into effect, hopefully, it will make it easier to pass this time around.

(Do you still need help with your Beneficial Ownership/CDD policies and procedures? Our BSA Fifth Pillar Program Evaluation was created to help make sure you're ready for your next regulatory exam. Our team will take a comprehensive look at your current situation, evaluate the position you are in and the effort needed to get you to a 100% compliant state. Contact us today for more information.)

About the Author

Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo’s platform centralizes the institution’s data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth. Make Big Things Happen.

Full Bio

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

Make Big Things Happen.

 

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