ABA, 51 State Bankers Associations Call on FinCEN to Withdraw Beneficial Ownership Registry Access Proposal

In a comment letter filed today, the American Bankers Association and 51 state bankers associations called on FinCEN to withdraw its latest proposal regarding access to the beneficial ownership registry, describing it as “fatally flawed.”

“The banking industry has long supported the establishment of the Registry, and remains committed to engaging with FinCEN to support and promote the goals of the CTA (Corporate Transparency Act), namely, combating illicit finance through the establishment of the Registry, while simultaneously reducing the regulatory burden on both small businesses and regulated entities,” ABA and all 51 state bankers associations wrote in their comment letter. “However, we believe that the proposal is fatally flawed and will not accomplish either of these objectives. Accordingly, FinCEN should withdraw the current proposal and engage with the financial services industry and small businesses to develop a new proposal that will better achieve the objectives of the CTA and AMLA (Anti Money Laundering Act).”

In the letter, ABA and the state associations observed that the proposed rule allows banks to access beneficial ownership information in the Registry only for purposes of complying with the 2016 Customer Due Diligence (CDD) rule, and not for broader BSA/AML compliance. If banks use the beneficial ownership information in the Registry, they will need to spend resources walling off that information from information obtained directly from customers, to prevent the Registry’s information from being used for the broader purposes of risk mitigation and Bank Secrecy Act compliance. In addition, the groups criticized the proposal for prohibiting banks from sharing beneficial ownership information outside of the United States, which would prevent them from sharing that information with bank personnel located in foreign jurisdictions.

“Although it is difficult to assess fully how the proposal will affect banks until FinCEN explains how it intends to amend the CDD Rule, it is nevertheless clear that the proposal does not meet Congress’ goal of promoting financial transparency while eliminating duplicative reporting requirements and reducing unnecessary regulatory costs and burdens,” the groups added. Instead, “The proposal creates a framework in which banks’ access to the Registry will be so limited that it will effectively be useless, resulting in a dual reporting regime for both banks and small businesses.”

The groups offered a number of recommendations to FinCEN to develop a more efficient framework, but called on FinCEN to “[E]ngage with key stakeholders, including banks and small businesses, to develop a new proposal that would establish a more efficient and effective regulatory framework for both banks and reporting companies.”

Read the full comment letter.