Significant 2021 impacts of U.S. company beneficial ownership and correspondent account reporting

In December 2020, the United States passed the National Defense Authorization Act for Fiscal Year 2021 (NDAA). President Trump vetoed the NDAA, but the U.S. Congress and Senate decided to override the veto and signed it into law on January 1, 2021.

This Act contains reforms that may affect individuals and corporations that do not reside in the United States, including the following:

1. New requirements are introduced for the reporting of beneficial owners to the Financial Crimes Enforcement Network (FinCEN), an office of the U.S. Department of the Treasury in charge of collecting and analyzing information on financial transactions to combat money laundering, terrorist financing and other domestic and international financial crimes. The Act establishes that regulations must be issued to implement these requirements within one year.
2. FinCEN is authorized to share beneficial ownership information with U.S. and foreign authorities.
3. Corporations, limited liability companies, and similar U.S. companies, as well as foreign companies domiciled in the U.S., are required to provide FinCEN with the following information about their beneficial owners:
   
   

i. Name

ii. Date of birth

iii. Residence or business address

iii. Identification number

The following companies are not required to report beneficial ownership information:

i. Public companies

ii. Subsidiaries solely owned by the public company

iii. Companies with more than 20 full-time employees in the United States

iv. Companies that have an operating presence at a physical office within the United States, and

v. Companies that filed tax returns in the United States reporting over USD 5 million in gross revenue or sales.

FinCEN’s beneficial ownership database will not be public. FinCEN will only release information in the following cases:

At the request of a state agency related to national security, intelligence, or law enforcement.
At the request of a state or local law enforcement agency with a court order to obtain such information as part of a criminal or civil investigation.

At the request of a federal agency on behalf of authorities of other countries covered by an international treaty or convention or by a request for assistance made by a foreign country.

Failure to report or incomplete/incorrect reporting of beneficial ownership information will be punishable by (i) a fine of up to USD 500 per day for the duration of the violation, and (ii) a fine of up to USD 10,000 and up to two years imprisonment.

4. Measures are introduced to strengthen anti-money laundering initiatives, including the possibility for the US government to require foreign banks that maintain correspondent accounts in the United States to provide information about such accounts or any other accounts at that bank.