Notice of Filing of Amendment to the National Market System Plan Governing the Consolidated Audit Trail
SIFMA provided comments to the U.S. Securities and Exchange Commission (SEC) addressing the Notice of Filing of Amendment to the…
February 7, 2022
VIA ELECTRONIC SUBMISSION
Financial Crimes Enforcement Network
P.O. Box 39
Vienna, VA 22183
Re: FinCEN Notice of Proposed Rulemaking on Beneficial Ownership
Information Reporting Requirements (Docket Number FINCEN–2021–0005,RIN 1506-AB49)
Dear Sir or Madam:
The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on the notice of proposed rulemaking (“NPRM”) issued by the Financial Crimes Enforcement Network (“FinCEN”) to implement the beneficial ownership information reporting provisions of the Corporate Transparency Act (“CTA”).2
On May 5, 2021, SIFMA submitted comments to FinCEN on the advance notice of proposed rulemaking (“ANPRM”) soliciting public input on a broad range of questions related to implementation of these provisions. SIFMA and its member financial institutions commend FinCEN for engaging with private sector stakeholders as it considers how best to implement the CTA and appreciates FinCEN’s consideration of our prior comments.
SIFMA strongly supports the objectives of the CTA to protect U.S. national security interests and the U.S. financial system and to better enable efforts to counter money laundering, terrorism financing, and other illicit activity by making it more difficult for malign actors to conceal their ownership of corporations, limited liability companies, and other similar entities in the United States. At the same time, as FinCEN finalizes the proposed rule, we encourage FinCEN to bear in mind Congress’s instruction to reduce burdens on both financial institutions and reporting companies that are unnecessary or duplicative.
Below, we comment on certain elements of the proposed rule and areas where we believe clarification would be helpful. SIFMA wishes to highlight the following key themes:
• Greater clarity as to the key requirements of the beneficial ownership information (BOI) reporting provisions and greater alignment of the provisions to the customer due diligence (CDD) rule (including alignment in the implementation date for the new requirements) will be essential to minimize confusion, ease compliance burdens, and ensure there are no gaps in information collection.
• At the same time, the BOI reporting provisions and CDD requirements serve different purposes in our national anti-money laundering (AML)/countering the financing of terrorism (CFT) regime. Financial institutions appreciate the potential benefits that access to a robust BOI database could offer related to their efforts to identify and report illicit financial activity. To ensure full utilization of the database, we urge FinCEN to state expressly that (a) it does not expect financial institutions to take on responsibilities to maintain or verify information in the database (rather, financial institutions should be voluntary users of the database), and (b) the existence and use of the database will not “ratchet up” existing CDD rule requirements that apply to financial institutions and as to which firms have spent years to design compliance systems, processes, and controls.
• Although we support the exclusions that FinCEN has proposed from the database’s requirements, we believe that the pooled investment vehicle (PIV) exclusion should be clarified to give it proper scope and effect.
• To enhance the usefulness and effectiveness of the BOI database, FinCEN should ensure that the final rule requires that reported information be kept updated within appropriate timeframes, and that financial institutions can easily access the information.
1 SIFMA is the leading trade association for broker-dealers, investment banks, and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly one million employees, we advocate for legislation, regulation, and business policy affecting retail and institutional investors, equity and fixed income markets, and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. With offices in New York and Washington, D.C., SIFMA is the U.S. regional member of the Global Financial Markets Association (GFMA).
2 Beneficial Ownership Information Reporting Requirements, 86 Fed. Reg. 69920 (proposed Dec. 8, 2021).