On November 15, 2024, FinCEN published updated FAQs regarding BOI access. These updated FAQs outline FinCEN’s approach in three phases for granting access to its BOI database and address what steps federal agencies should take in requesting access.
This is naturally a sensitive topic as BOI reports contain data about companies and owners that individuals may not want in the public domain. So, today we have listed five key questions regarding BOI database access and provided detailed answers to them for your convenience.
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1. What is Beneficial Ownership Information (BOI) And Why is It Important?
BOI reporting refers to providing information about the legally operating individuals who, through substantial ownership or management authority, own or control reporting entities. The need for this information interfaces in:
- Combating illicit financial activities like money laundering and terrorist financing.
- More transparency within corporate structures.
- Ensuring the observation of CTA, as well as other financial regulations.
FinCEN supports law enforcement and regulators in unmasking bad actors across the financial system by keeping this information in a secure database.
2. What is the Phased Approach For Accessing Beneficial Ownership Information?
FinCEN implements the step-by-step availability of access to its BOI database, in a way that balances security and proper management of sensitive data but provides a gradual scale-up of access to various levels of authorized users. The phases will involve the following:
- Phase 1 (Spring 2024) – A small group of federal agency users started a pilot of the new system.
- Phase 2 (Late Summer 2024) – Treasury offices and select federal agencies with existing MOUs for BSA information in support of law enforcement, national security, and intelligence will have access to the BOI database.
- Phase 3 (Fall 2024) – Expanded access to additional federal agencies and to state, local and tribal law enforcement partners.
- Phase 4 (Winter 2024) – Intermediary Federal agencies will handle requests from foreign governments and provide access.
- Phase 5 (Spring 2025) – Financial institutions covered by the customer due diligence rule and their supervisors would get access.
3. Who Can Access BOI Under the Corporate Transparency Act?
BOI database access is restricted to only those entities specified in the CTA, which are:
- Federal Agencies – Engaged in national security, law enforcement, or intelligence activities.
- Regulatory Agencies – Oversight of financial institutions to ensure customer due diligence.
- State, Local and Tribal Law Enforcement – Available during Phase 3.
- Foreign Governments – Access in Phase 4 will be mediated through intermediary federal agencies.
- Financial Institutions – Available under Phase 5, for compliance purposes.
Access by each of these groups is dependent on a set of strict criteria concerning security and confidentiality.
4. How Can Federal Agencies Request Access to BOI Database?
Federal agencies that perform activities for national security, intelligence, or law enforcement may request access to BOI provided they meet FinCEN’s requirements. To do so, agencies have to do the following:
- Submit an Access Request – The submission should outline what the information is going to be used for and confirm that the agency is eligible under the phased implementation timeline.
- Sign a Memorandum of Understanding (MOU) – This will outline how the agency will guarantee the confidentiality and security of BOI received.
- Coordinate Through Existing Channels – Agencies with BSA access already should coordinate through their respective agency coordinators to request access to BOI.
Agencies that are not yet eligible because of the phasing of the timeline have to wait for their respective phases.
5. What Safeguards Are In Place for BOI Database Access?
For the security and integrity of the BOI database, FinCEN institutes several controls:
- Restricted Access – Access is restricted to only those entities that may request BOI and applications are vetted to ensure conformance with the policies promulgated by FinCEN.
- Confidentiality Agreements – MOUs must be signed by agencies detailing how they will safeguard the information.
- Phased Implementation – The access provided is such that it ensures the security features are in place effectively.
- Oversight and Monitoring – FinCEN oversees access to and use of BOI regarding violations of the Corporate Transparency Act.
Conclusion
While FinCEN further opens access to the list of ultimate actual beneficiaries, security in data management and strict eligibility criteria are emphasized. Federal agencies and other competent entities should, therefore, prepare to meet the requirements set by FinCEN in order to utilize this critical information properly for deterrence against financial crimes.
Those who intend to apply for BOI database access should remain updated with FinCEN’s phase-by-phase approach and follow the protocols laid down for better compliance and transparency. If you require any assistance with the filing process or have any queries about BOIR filing, please contact us and let our team of experts help.