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Treasury Announces Plans to Educate Small Businesses on Anti-money Laundering Rules

· 5 minute read

· 5 minute read

By Brett Wolf

The U.S. Treasury Department’s anti-money laundering bureau will soon publish a guide and establish a support center to help small businesses understand their impending obligations to report information about their true, or “beneficial,” ownership, a senior official said.

The announcement comes as Treasury’s Financial Crimes Enforcement Network (FinCEN) has faced scathing criticism from Republicans in Congress who are concerned that, to date, millions of small businesses across the country have not even been notified of the forthcoming legal requirement, let alone been educated on compliance.

Treasury understands “that these are new requirements that communities need to learn about from FinCEN, an organization you may have never interacted with before,” Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, said in written remarks delivered to a business audience in Lexington, Kentucky, on Tuesday.

Congressman Andy Barr, a Republican from Kentucky and chairman of the House Subcommittee on Financial Institutions and Monetary Policy, was also present.

Corporate Transparency Act

FinCEN is responsible for issuing rules to implement the Corporate Transparency Act (CTA), legislation enacted by Congress as part of the Anti-Money Laundering Act of 2020 (AMLA), in a push to stem widespread abuse of legal entities by criminals.

FinCEN issued a final rule outlining beneficial ownership information (BOI) reporting requirements, which significantly affect small businesses, in September; the 330-page rule will come into force on January 1, 2024.

Companies formed or registered before January 1, 2024, will have one year to comply, while companies formed or registered after that date will have 30 days from the date of formation or registration to comply.

As reported by Thomson Reuters’ Regulatory Intelligence, last month FinCEN faced withering criticism during a hearing held by the U.S. House Financial Services Committee’s Subcommittee on National Security, Illicit Finance, and International Financial Institutions.

A primary concern expressed by many during the hearing was a lack of educational outreach to the small businesses that will soon be impacted by the rule.

Nelson seemed to be addressing such concerns during his remarks in Kentucky.

FinCEN will soon be publishing a “Small Entity Compliance Guide” that will “describe in simple, easy-to-read language each provision of the Beneficial Ownership Information Reporting Rule, which implements the reporting requirements of the CTA and goes into effect January 1, 2024,” Nelson said.

“It will also provide answers to key questions, with checklists and other tools to assist businesses in complying with their reporting obligations,” he said.

Contact center to ‘reduce regulatory burden’

Treasury will “be standing up a contact center to assist small business owners in filing beneficial ownership reports, respond to questions from the public, and reduce regulatory burden,” Nelson said.

He also vowed that reporting companies “can be confident that their sensitive information is protected in a secure, confidential database built to meet the highest security standards, and that only authorized users can access the information for authorized purposes-to protect national security and to fight crime.”

“We have also developed a robust outreach strategy to disseminate information as broadly and as completely as possible to ensure everyone impacted has the information they need,” he said.

Absent adequate educational efforts by FinCEN, or perhaps despite them, financial institutions may find their relationship managers and frontline employees fielding questions about the new rules and may wish to take steps to ensure awareness regarding proper responses to such queries.

This article originally appeared in Thomson Reuters’ Regulatory Intelligence


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