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US Treasury acts on beneficial ownership

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The US Treasury Department has announced a group of measures aimed at strengthening financial transparency. These are a customer due diligence (CDD) final rule, proposed beneficial ownership legislation, and proposed regulations related to foreign-owned, single-member limited liability companies (LLCs).

The CDD final rule adds a new requirement for financial institutions to collect and verify information on the identity of the beneficial owners of companies when they open accounts. The requirement will extend to any individual who owns 25% or more of a legal entity, and to an individual who controls the legal entity. An implementation period of two years is proposed.

Announcing plans for beneficial ownership legislation, the US Treasury commented: ‘Misuse of companies to hide beneficial ownership is a significant weakness in the US anti-money laundering/counter financing of terrorism regime that can only be resolved by Congressional action.’

The proposed regulations on foreign-owned ‘disregarded entities’ with no current obligation to report information to the IRS, including foreign-owned single-member LLCs, would require them to obtain an employer identification number with the IRS. According to the US Treasury, this is a ‘narrow class’ of foreign-owned US entities that can be used to shield the foreign owners of non-US assets or non-US bank accounts.


Issue: 1308
Categories: News