BackgroundThe CTA requires each reporting company to file a beneficial ownership report. The report must identify the company's "company applicant" and each "beneficial owner."
For each of these, the report must include each individual's:
1. Full legal name,
2. Date of birth,
3. Current residential address,
4. A unique identifying number from an acceptable identity document (such as an unexpired drivers license or passport) or a unique identity number generated by FinCEN; and
5. An image file of the document that provides the unique identifying number.
Key Compliance RequirementsTo prepare the beneficial ownership report, the reporting company will need a written agreement with its shareholders. The agreement should obligate each shareholder to provide the needed information. For example, most companies could incorporate these concepts into a shareholders agreement.
To ensure data security, the reporting company should adopt a system that securely stores the collected data, restricts access, and facilitates timely reporting.
The CTA requires reporting companies to file an amendment within 30 days after any change to an item of previously-reported data. This is a far-reaching requirement. As a result, the company-wide agreement should obligate shareholders to notify the company's compliance leader promptly after any changes in personal information. Because the law requires an amendment within 30 days, shareholders must promptly report changes in their data. In addition, the company's compliance leader must be prepared to file an amendment promptly after learning of any change.
To manage CTA compliance, each reporting company should prepare a written procedure that the compliance leader will maintain. Part of that written procedure should include an IT system that collects and safely stores the collected information .
FinCEN IdentifierFinCEN's proposed regulations allow individuals to obtain a "FinCEN Identifier," or a special ID number for CTA purposes.
While having a FinCEN Identifier will be helpful, it will not be a panacea.
The proposed regulations require an individual to submit to FinCEN in their ID application all of the same information that would have been included in a beneficial ownership report.
Later, the individual may submit their FinCEN Identifier it to any reporting company who must include the individual's data in a report.
The individual, however, will be obligated to notify FinCEN when any of the individual's personal data changes in a way that would have triggered an amendment to the beneficial ownership report. The individuals will be obligated to notify FinCEN within 30 calendar days after any data change.
As a result, obtaining a FinCEN Identifier doesn't relieve an individual's duty to file an amendment within 30 days. Having the ID number simply shifts the amendment duty from the reporting company to the individual.
Individuals who are beneficial owners or company applicants should plan ahead for their filing duties under the CTA. While the new law has not yet taken effect, there are filing service providers who are allowing individuals to start the registration process in advance.