The Oklahoma Bar Journal February 2024

A corporation, a limited liability company, or other similar entity that is—

want to dig deeper into the CTA. However, this is just one of “three reporting rulemakings planned to implement the CTA.” 10 As part of the CTA, FinCEN was also required to design a reporting form and a Beneficial Ownership Secure System (BOSS) to securely store the beneficial ownership information. 11 The reporting form must be submitted online. You can either fill out the PDF form avail able online to later submit online or use the online filing system FinCEN has created. 12 REPORTING REQUIREMENTS: WHOSE INFORMATION GETS REPORTED? The main point of the CTA is to provide FinCEN with infor mation on beneficial owners of companies and company appli cants. Although this seems like a simple requirement, one must carefully analyze who is required to report, who is considered a beneficial owner of the reporting company and company applicant for the reporting company, what information you must report on the beneficial owner and company applicant, and what triggers the need for additional reporting. Reporting Companies If you are advising estate plan ning clients who own a business entity or advising clients to create certain types of entities, it is important to determine whether their entity is considered a “report ing company” under the CTA and required to make a report to FinCEN. The CTA includes many different types of entities in the definition of a reporting company. Specifically, the CTA defines a reporting company as:

Illicit actors frequently use corporate structures such as shell and front companies to obfuscate their identities and launder their ill-gotten gains through the United States. Not only do such acts undermine U.S. national security, they also threaten U.S. economic prosperity: shell and front companies can shield beneficial owners’ identities and allow criminals to illegally access and transact in the U.S. economy, while disadvantaging small U.S. businesses who are playing by the rules. 5 The editorial notes on the CTA also reference money launderers layering business structures “much like Russian nesting ‘Matryoshka’ dolls.” 6 From these comments surrounding the passage of the CTA, one can see that the intent behind the legislation is to provide FinCEN with beneficial owner ship information so that it can investigate if a company is merely a shell company engaging in ille gal activity. Therefore, access to information submitted to FinCEN is limited to federal and law enforcement agencies for civil or criminal investigations. 7 Entities may also authorize the release of the information to financial insti tutions to assist with customer due diligence requirements. 8 Although the CTA went into effect in January 2021, there were still many questions that needed to be answered about whether report ing beneficial ownership infor mation to FinCEN would actually work and what would be required to be reported. After a comment period, FinCEN released the final rules for the CTA on Sept. 30, 2022, which answered a lot of questions. 9 These are a great reference if you

(i) created by filing if a document with a secre tary of state or a similar office under the law of a State or Indian Tribe; or (ii) formed under the law of a foreign country and registered to do business in the United States by the filing of a document with a secre tary of state or a similar office under the laws of a State or Indian Tribe. 13

Based on this definition, there will be numerous entities nation wide that will be required to report to FinCEN. There are many differ ent types of business entities that are formed with the secretary of state: corporations, limited liability companies, nonprofit corporations, limited liability partnerships and limited partnerships. 14 However, there are 23 listed entity types that are not required to file a report with FinCEN. 15 The exceptions are primarily types of entities in areas of business that are already reporting to and moni tored by other government agen cies, such as insurance producers that are “subject to supervision by the insurance commissioner or a similar official agency of a State; and has an operating presence at a physical office within the United States,” 16 entities registered with the Securities Exchange Act of 1934, 17 credit unions, 18 etc. In its final rule, FinCEN declined to delve deeper into defining reporting companies. For example, one commenter raised concern that a sole proprietor filing a document

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

8 | FEBRUARY 2024

THE OKLAHOMA BAR JOURNAL