U.S. companies in no hurry to disclose ownership under new Treasury rule
- Treasury Secretary Janet Yellen said 100,000 companies have registered their beneficial owners so far, under a new rule that went into effect Jan. 1.
- Registrations will need to substantially increase to meet the estimated 32.6 million companies required to register this year.
- The BOI Reporting Rule will expedite investigations into illicit financial activity, Yellen said.
WASHINGTON — Treasury Secretary Janet Yellen on Monday announced that just one week after a major new reporting requirement went into effect, over 100,000 small businesses have already registered with the department's beneficial ownership database. though initial numbers lag behind projections.
"We're closing a loophole and sending a clear message: The United States is not a haven for dirty money," Yellen said during a visit to ther Financial Crimes Enforcement Network, or FinCEN, headquarters in Vienna, Virginia.
Initial numbers lagged behind earlier projections, however. At this pace, meeting a 2022 prediction that approximately 32.6 million businesses will need register this year appears difficult.
FinCEN also estimates 5 million additional reporting companies annually, over the next 10 years.
A spokesperson for Treasury told CNBC that the agency is pleased with the filing rate.
"As more businesses learn if they are required to report under the new law, we expect filing numbers to grow exponentially," the spokesperson said.
Treasury has undertaken several outreach efforts, including partnerships with other federal and state agencies, to spread awareness about rule requirements, according to the spokesperson.
The reporting rule is part of the 2021 Corporate Transparency Act that went into effect on Jan. 1. It requires all but certain types of companies to disclose who really controls and benefits from them.
Until now, thousands of companies were registered every year under the names of hired corporate agents, or attorneys for the actual owners, effectively hiding who actually controlled the companies. The new rules will make the registry available to law enforcement to expedite investigations into illicit activities — such as drug trafficking and tax evasion.
"The benefits of increasing corporate transparency through gathering beneficial ownership information— put simply, knowing who owns what—start with protecting our national security," Yellen said. "Information on beneficial ownership will support our law enforcement colleagues in making arrests, prosecuting offenders, and seizing ill-gotten assets."
FinCEN issued the final rule on BOI in December. Over the past year, the enforcement network has tracked attempts by Russian nationals to evade U.S. sanctions and sued Binance, the world's largest cryptocurrency exchange, for violating the Bank Secrecy Act.