Beneficial Ownership Database Could Provide Significant Relief

Credit unions are highly supportive of the creation of a beneficial ownership database and hope it will greatly ease meeting customer due diligence obligations under the Bank Secrecy Act (BSA) CUNA wrote to the Financial Crimes Enforcement Network (FinCEN) Monday.

CUNA submitted comments on FinCEN’s proposal involving beneficial ownership information reporting requirements, required by the Corporate Transparency Act (CTA), a section of the enacted Anti-Money Laundering Act of 2020.

The law requires certain entities report beneficial owner and company application information directly to FinCEN, which will maintain that information in a confidential, secure, and non-public database.

CUNA urges FinCEN align all reporting requirements with the BSA and anti-money laundering/countering the financing of terrorism (AML/CFT) regimes under which credit unions operate, noting that anything less will create “confusion and inefficiencies.”

“Credit unions hope the database envisioned in the CTA will provide significant and important relief from the burden created by the CDD Final Rule,” the letter reads. “The likelihood of that outcome is dependent on FinCEN establishing a database that aligns with CDD requirements and a framework that includes appropriate safe harbors to ensure financial institutions that access it are obtaining accurate and useful information more efficiently.

CUNA notes several inconsistencies in language and definitions in the beneficial ownership information reporting proposal and the Customer Due Diligence (CDD) rule itself.

The CTA requires that FinCEN revise the beneficial ownership information CDD requirements for financial institutions to bring them in line with requirements under the CTA. CUNA believes much of this definitional misalignment may be addressed through these revisions.

“CUNA strongly urges FinCEN to wait to finalize the language for these reporting requirements until it has first promulgated revisions to the CDD regulations to bring both rules into alignment. FinCEN should wait until the comment period on that proposal has run, and FinCEN has thoroughly digested comments from affected financial institutions,” the letter reads. “Only once FinCEN has considered the implications from the perspective of both reporting entities and financial institutions subject to CDD requirements can it confidently create a functional, cohesive framework that will operate efficiently and effectively.”

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Related: NAFCU, CUNA Supportive of FinCEN Database