Corporate Transparency Act: Rules on Access to Beneficial Ownership Information

As you may be aware, the federal Corporate Transparency Act (“CTA”) went into effect January 1, 2024, and requires many business entities to report certain information about their beneficial owners to the Financial Crimes Enforcement Network (“FinCEN”).

To implement the CTA, FinCEN issued several rules, including a rule prescribing the circumstances under which beneficial ownership information (“BOI”) may be disclosed to authorized recipients (e.g., certain Federal agencies, state governments, and financial institutions) and how such recipients must protect the information they receive.

This rule is referred to as the “Access Rule.” On February 20, 2024, FinCEN published a guide to assist financial institutions in complying with the Access Rule. A copy of the guide can be found here: BOI Access and Safeguards SECG (fincen.gov).

Per the guide, in order to access BOI, a financial institution is required to develop and implement various safeguards to protect the security, integrity, and confidentiality of the BOI. Such safeguards include first obtaining and documenting a customer’s consent to request the customer’s BOI from FinCEN.

Even after a financial institution has met the requirements to access BOI, it does not have authority to use the BOI however it so desires. A financial institution’s use of BOI is limited to fulfilling customer due diligence requirements under applicable law (such as customer identification requirements).

Compliance with the CTA presents a new challenge for companies. The attorneys at Dvorak Law Group continue to monitor guidance and legal authority from FinCEN and are ready to properly advise you on the CTA and whether your business is subject to its reporting requirements.