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As It Cracks Down On Money Laundering, FinCEN Releases Final Rules For Disclosing LLC Ownership


A key piece of enforcement has been laid out for the U.S. justice system's attempt to root out money laundering in real estate.

The Financial Crimes Enforcement Network released its final rules for the disclosure of ownership information for most companies on Thursday, laying out which companies are subject to disclosure requirements, which owners must be disclosed and what information must be disclosed about such owners.

With the rules finalized, enforcement of the Corporate Transparency Act is set to take effect Jan. 1, 2024.

Under the finalized rule, a corporation, limited liability company, or any entity created by the filing of a document with a state or tribal territory must disclose its beneficial owners' names, birthdates, addresses and a tax or financial identification number with FinCEN. A beneficial owner is defined as someone who exercises substantial control over a reporting company and/or owns or controls at least 25% of the ownership interests of a reporting company.

Five types of owners and 23 types of companies are exempted from disclosure requirements, FinCEN's announcement stated. Companies formed after the rule takes effect have 30 days to file their beneficial owner information, while companies that existed before the start of 2024 have a full year to become compliant. 

The CTA was passed in December 2020 as part of the national defense spending bill, but FinCEN only posted a notice of proposed rulemaking nearly a full year later. Only one of three sets of rules have been released, well past the deadline set by the text of the CTA.

In the past few years, money laundering has proliferated to affect a more diverse group of asset classes and geographical areas.

The second set of rulemaking, for which a schedule has not been released, will determine who will be permitted access to the ownership information submitted to FinCEN. The agency is still working on creating a system to house such information securely.