As the effective date of the US federal Corporate Transparency Act approaches, FinCEN continues to develop its rules almost on a daily basis. Within the past few days, the Financial Crimes Enforcement Network (“FinCEN”) published notice of proposals aimed to clarify and ease compliance with certain aspects of the regulations promulgated under the Corporate Transparency Act. The Corporate Transparency Act requires certain entities (“reporting companies”) to report to FinCEN information about their beneficial owners and company applicants, and is intended to help prevent and combat money laundering, terrorist financing, tax fraud and other illicit activity.[1] The Beneficial Ownership Reporting Rule (the “BOI Rule”), promulgated by FinCEN in September of 2022, establishes who are reporting companies and their beneficial owners and company applicants, as well as what information is required to be reported about these entities and individuals.
Countdown to Transparency: Beneficial Ownership Reporting
In 2021, the U.S. enacted the Corporate Transparency Act (the “CTA”) as part of a multi‑national effort to rein in the use of entities to mask illegal activity. The CTA directs the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) to propose rules requiring certain types of entities to file a report identifying the entities’ beneficial owners and the persons who formed the entity. FinCEN issued the final rule on Beneficial Ownership Information Reporting Requirements (the “Reporting Rule”) on September 29, 2022. FinCEN recently published a Small Entity Compliance Guide intended to assist entities in determining whether they are required to file a report and what information will need to be reported. The Reporting Rule will become effective on January 1, 2024.
CFTC Proposes Changes to Margin Requirements for Uncleared Swaps
On July 26, 2023, the CFTC approved a proposal to amend the margin regulations for uncleared swaps (the “Proposed Amendments”).[1] The Proposed Amendments, if finalized, would relieve registered swap dealers and major swap participants (“CFTC Registered Entities”) from the requirement to post and collect margin for uncleared swaps with certain
Shining a Light on the Corporate Transparency Act: FinCEN’s Rules for Beneficial Ownership Reporting
On January 1, 2021, Congress enacted the Corporate Transparency Act (the “CTA”) as part of the Anti-Money Laundering Act of 2020 in the National Defense Authorization Act for Fiscal Year 2021. Congress passed the CTA to “better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity.” The CTA requires a range of entities, primarily smaller, otherwise unregulated companies, to file a report with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) identifying the entities’ beneficial owners—the persons who ultimately own or control the company—and provide similar identifying information about the persons who formed the entity. The CTA also authorizes FinCEN to disclose this information to authorized government authorities and to financial institutions in certain circumstances.
In A Trinity of Releases, the SEC Proposes To Make Hedging Transactions More Transparent
If adopted, the proposals will likely impact market practices
In a trinity of proposing releases rolled out in less than three months, the SEC has comprehensively proposed to regulate the use of derivatives and short sales by private investors, including private funds, hedge funds and family offices. The proposed new regulations reflect a decision by