ABA Comment Letter on FinCEN Reporting Rule Paperwork Reduction Act Request

Policy Division
Financial Crimes Enforcement Network
P.O. Box 39
Vienna, VA 22183

Dear Sir or Madam:

On September 29, 2022, the Financial Crimes Enforcement Network (FinCEN) issued a final rule (Final Rule) that requires corporations, limited liability companies, and other legal entities to report beneficial ownership information (BOI) to a database that FinCEN is creating for this purpose (the Registry), pursuant to the Corporate Transparency Act (CTA). In conjunction with its issuance of the Final Rule, FinCEN is seeking approval by the Office of Management and Budget of a form (the Report) entities will use to report BOI to the Registry, as FinCEN is required to do under the Paperwork Reduction Act (PRA Request). The American Bankers Association (ABA) appreciates the opportunity to comment on the data fields and other aspects of FinCEN's proposed Report described in the agency's PRA Request.

I. Summary of Comment

ABA has long supported the creation of a Registry of BOI. We remain committed to engaging with FinCEN to support and promote the goals of the CTA, namely combating illicit finance through the establishment of the Registry. We also support Congress' requirement in the CTA that FinCEN ensure the Registry is "highly useful in . . . confirming beneficial ownership information provided to financial institutions" in order to facilitate institutions' compliance with customer due diligence and other requirements to combat money laundering and counter the financing of terrorism.

However, we are deeply concerned that the Final Rule and the agency's proposal concerning access to that Registry are not consistent with the objectives of the CTA and that the Registry will be of limited, if any, value to banks. These actions create a framework in which banks' access to the Registry will be so limited that it will effectively be useless, resulting in a dual reporting regime for both banks and small businesses, among other deficiencies. Moreover, the data fields and other aspects of FinCEN's proposed Report will exacerbate these problems, raising serious questions about the utility of the BOI collected. FinCEN has established no mechanism to validate the information reported to the Registry. The agency also would allow a filer to list "Unknown," "Unable to identify all Company Applicants," and "Unable to identify all Beneficial Owners" as responses to key demographic information sought about company applicants and the company's beneficial owners. The option to choose these response categories is inconsistent with Congress' direction to FinCEN in the CTA, may allow bad actors to obscure the identity of company applicants and beneficial owners, and will significantly limit the utility of the information available through the Registry to law enforcement, financial institutions, and others who may access the Registry.

Congress enacted the PRA to ensure that, when FinCEN or another federal agency collects information from the public, the information collection provides the "greatest possible" benefit to the public, "maximize[s] the utility" of the information collected to the government, and minimizes the paperwork burden on small businesses and others related to the collection.8 We do not believe the proposed Report meets these standards, and we urge FinCEN to delete those responses that would permit a filer to respond "Unknown," "Unable to identify all Company Applicants," and "Unable to identify all Beneficial Owners" as responses to key demographic information sought about company applicants and the company's beneficial owners.

FinCEN also should revise its estimate of burden to regulated entities in its PRA Request to include the impact of the Final Rule on financial institutions. Undoubtedly, legal entity customers that are required to report information to the Registry will ask their bank about the purpose of FinCEN's reporting requirement and for assistance with fulfilling that requirement. That burden should be reflected in the PRA Request.

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