Why is FinCEN requiring reporting from only foreign companies?

Through its National Money Laundering Risk Assessments and other products, Treasury has long emphasized the risks of foreign illicit actors accessing the U.S. financial system through the use of legal entities created in foreign jurisdictions but registered to do business in the United States. Having taken into account those risks, the final rule—like the IFR—reflects Treasury’s focus on ensuring a targeted, risk-based approach to the collection of beneficial ownership information. Importantly, in developing the final rule, Treasury considered that there are alternative sources of information to mitigate the risks posed by domestic entities. When investigating potential illicit activity, Treasury, law enforcement, and other authorities continue to have a variety of tools available to them to obtain information on domestic companies. For example, the continuing requirement for covered financial institutions to collect a legal entity customer’s beneficial ownership information under the Customer Due Diligence Rule is an important part of covered financial institutions’ overall anti-money laundering and countering the financing of terrorism programs, as it provides covered financial institutions (and law enforcement upon request) valuable information about their legal entity customers. That obligation will serve to mitigate certain illicit finance risks associated with exempting domestic reporting companies from reporting their BOI.