CTA Compliance for Trusts and Estates: FinCEN Final Regulations, Reporting of Beneficial Owners, Safe Harbor Rules

Description

The CTA requires certain U.S. and foreign entities that are defined as reporting companies to report beneficial owners and company applicants to FinCEN (the Department of the Treasury's Financial Crimes Enforcement Network). FinCEN will establish and maintain a non-public national registry of beneficial owners and company applicants of reporting companies to prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity.

These federal reporting rules have levied a significant burden on trusts and estates which tend to use a variety of entities for estate planning purposes, and related companies formed prior to and after the effective date of the CTA. Noncompliance with these reporting rules may result in significant civil and criminal penalties.

Therefore, trusts and estates that are potentially impacted by these rules should commence determining: (1) whether a business arrangement or entity is within the scope of the final rule and considered a reporting company, or otherwise exempt from reporting; (2) who is a beneficial owner and a company applicant; (3) how trusts are treated under the CTA; (4) the information that is required to be reported by a reporting company, beneficial owner, and company applicant; (5) the necessary due diligence that a reporting company must undertake to file a true, correct, and complete report; (6) when a report is initially due, required to be updated, or required to be corrected; (7) the potential ramifications of noncompliance; and (8) how to establish a workstream to prepare for, collect, maintain, and report information required to be reported under the CTA in an estate planning context.

Listen as our panel discusses the CTA beneficial ownership information reporting rules, how these rules apply to trusts holding business assets, owners, and beneficiaries, necessary steps upon the owner's death, new safe harbor provisions, and correction procedures.