FACT Coalition Calls for Modern Data Standards to Strengthen Beneficial Ownership Database Effectiveness

Washington, DC – The FACT Coalition sent a letter today to the Financial Crimes Enforcement Network (FinCEN) urging the agency to act quickly to implement the secure directory of beneficial owners of U.S. entities under the Corporate Transparency Act (CTA) and, in doing so, to adopt a set of internationally recognized best data practices.

“To seize Russian yachts, you have to know who owns them. The current crisis in Ukraine has only further demonstrated the urgency of implementing an effective database to reveal the true owners of anonymous shell companies,” said Ian Gary, executive director. FinCEN must move expeditiously to deliver on the Corporate Transparency Act and provide national security officials and law enforcement modern, effective tools to rout out oligarch funds from the U.S. financial system.” 

Treasury Secretary Yellen fielded concerns in a hearing last week in the House Financial Services Committee over FinCEN’s unhurried implementation of the CTA. Yellen promised that the second CTA rule would be proposed “this year, in the coming months.” Lawmakers expressed concern regarding FinCEN’s timetable for implementation, especially at this crucial moment in which U.S. national security officials are scrambling for tools to track assets of sanctioned Russian oligarchs. Acting FinCEN Director Him Das will be appearing before the same committee April 28 and will likely face similar lines of questioning. 

Its letter, the FACT Coalition said that FinCEN, in advancing its rulemaking, should adhere to international data best practices, consistent with those formulated by the nonprofit Open Ownership. These data standards were just endorsed last week by the Government of the United Kingdom, showing a commitment by the UK to correct unforced errors in its anti-money laundering framework. Fortunately, the U.S. can learn from early data stumbles faced by other countries, like the U.K., and start with a well-functioning and highly useful directory from day one. 

FinCEN is currently drafting the second of three proposed rules to implement the Corporate Transparency Act. The first rule defined which U.S. entities would be required to report and what information they would report. The second rule is expected to clarify in greater detail who will be able to access information in the database, using what protocols. As such, the second rule should also include specifications concerning data practices and database construction, as these are intimately connected with policy provisions on access.

Notes to the Editor: 

• FACT’s letter to FinCEN Endorsing Open Ownership’s recommendations for data best practices.
• Concurrent letter from Transparency International-US to FinCEN urging endorsement of Open Ownership beneficial ownership standards.
• FACT’s comment letter to FinCEN in response to the first proposed rule (NPRM) on the Corporate Transparency Act, establishing beneficial ownership reporting requirements. 

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