The Financial Crimes Enforcement Network (FinCEN) this week announced a notice of proposed rulemaking (NPRM) that would extend the time allowed for entities formed or registered to do business in 2024 to file their initial beneficial ownership reports. Comments may be submitted on or before October 30, 2023.
FinCEN's reporting rule (31 CFR 1010.380) requires non-exempt reporting companies formed or registered to do business on or after January 1, 2024 to file an initial beneficial ownership report within 30 days after the date of formation or registration.
That initial beneficial ownership report must provide detailed information about (1) the beneficial owners of the reporting company; and (2) the company applicants, who are the individuals who filed a document to create the reporting company or register it to do business.
FinCEN explained in the notice that accompanied the NPRM that extending the time to file would allow these reporting companies additional time to collect the required information and additional time to understanding the filing requirements.
The NPRM follows the lead of some bills that had been introduced in Congress, which sought a similar outcome through new legislation. With the legislative prospects for change being dim, FinCEN appears to have adopted a pragmatic approach to give newly-formed companies a little extra time.
Attorneys and their small business clients, however, should not take this development as a signal that FinCEN will consider further delays. The CTA implementation deadline of January 1, 2024 remains intact. Entities in existence before January 1, 2024 will have until January 1, 2025 to file their initial beneficial ownership reports.
FinCEN recently issued a Small Entity Compliance Guide that it hoped would provide clarification to small businesses that will need to file reports with FinCEN under the CTA. That development, and FinCEN's proposal of this additional time to file, suggests that FinCEN is not contemplating any further delays in the CTA implementation date. Small businesses and their attorneys should implement changes in their procedures in anticipation of the January 1, 2024 implementation deadline.