Financial Crime World

New Rule Brings Transparency to Financial Crimes Reporting in the United States

The U.S. Government Accountability Office (GAO) has conducted an extensive review of the Financial Crimes Enforcement Network’s (FinCEN) new rule on “Beneficial Ownership Information.” This rule is designed to enhance transparency and tackle potential vulnerabilities in the financial system concerning money laundering and terrorist financing.

FinCEN Issues New Rule on Beneficial Ownership Information

On May 12, 2021, FinCEN, a bureau under the Department of the Treasury, finalized the rule requiring certain financial institutions and others to report and maintain records of beneficial ownership information for new legal entity customers. The following are the key points regarding the new rule:

  • Beneficial owners: People who directly or indirectly own 25% or more of a legal entity - this includes equity, debt, or a combination thereof.
  • Effective Date: The final rule is expected to take effect on April 1, 2023.
  • Proper Rulemaking Procedures: FinCEN followed proper rulemaking procedures, providing adequate justifications and addressing comments from various stakeholders.

GAO’s Evaluation of the New Rule

The GAO’s evaluation focused on the rule’s process and potential implications. Some of the key findings include:

  • Proper Rulemaking Procedures: FinCEN followed the proper rulemaking procedures, including providing adequate justifications and addressing comments from various stakeholders.
  • Improved Ability to Trace Illicit Funds: The new rule could provide law enforcement and regulatory entities with an improved ability to trace flows of illicit funds and establish effective risk management systems.

The Importance of Financial Transparency

The U.S. GAO’s thorough examination of financial crime reporting requirements aims to provide insight and transparency into how federal agencies are addressing vulnerabilities in the financial sector. For more detailed information on the GAO’s reports and testimonies, visit their website.

Safeguarding our Financial Systems

With financial crimes on the rise, it’s crucial for regulatory agencies to be proactive in implementing measures that enhance transparency and combat illicit activities. The new rule by FinCEN underscores the ongoing commitment of the U.S. Government to safeguard our financial systems and protect our citizens.