If You’re Not Worried About FinCEN’s New Ruling, You’re Not Paying Attention
I almost couldn’t believe it when I first read about FinCEN’s new beneficial officer’s ruling. I thought it had to be some kind of joke the government was playing on financial institutions. I just didn’t want to believe that the government would require institutions to find the responsible officers for all their legal entity customers when there is no feasible way to obtain that information!
I guess maybe I’m just a little naïve. Maybe I haven’t been burned enough by the government to think it’s out to get me. Or maybe I want to believe that the government is good and actually wants to try and protect us from terrorists and corrupt companies using our services to hide their illegal activities.
Yeah, I know – just call me Pollyanna, the one who thinks that everything FinCEN does is all sunshine and roses.
But come on, even if FinCEN is just trying to add another layer of security and safety, trying to protect us from the real bad guys out there, this whole beneficial officers thing still gets to me. I can’t be the only one, right? How do they expect any institution to abide by this final ruling, or do their “best effort” as they say in the ruling, when there is no solution out there that can provide them with the required information - barring asking their customers, which if they are dirty, won’t come clean anyway.
In case you’re not familiar with this news story, let me explain…
On July 11, 2016 FinCEN released their final ruling on Customer Due Diligence. This final ruling, also called the Beneficial Ownership Identification ruling, requires that all covered institutions (basically all financial institutions), must perform due diligence on not only the customer listed for the legal entity but also all responsible officers for that legal entity. This includes all owners with more than 25% ownership of the entity or any single individual who is responsible for making decisions for the entity (CEO, Executives, etc).
FinCEN justified this ruling with the following: “Covered financial institutions are not presently required to know the identity of the individuals who own or control their legal entity customers (also known as beneficial owners). This enables criminals, kleptocrats, and others looking to hide ill-gotten proceeds to access the financial system anonymously. The beneficial ownership requirement will address this weakness and provide information that will assist law enforcement in financial investigations, help prevent evasion of targeted financial sanctions, improve the ability of financial institutions to assess risk, facilitate tax compliance, and advance U.S. compliance with international standards and commitments.”
Now, before I really get to the bulk of my compliant with this ruling, I want to state that I wholeheartedly agree with what FinCEN is trying to do. If the Panama Papers proved anything it’s that there is a massive hole in our current system and I believe FinCEN has found a viable solution to the problem.
But, currently, there is no way to abide by this ruling. Instead, FinCEN is relying on the institutions to find and validate this information on their own, without any resources beyond flooding their secretary of state office with requests for information on every small and non-public company they happen to do business with.
And that’s what has me so up and arms about this whole situation. It just makes me sick every time I think about the time and energy being spent (and will be spent) to comply with this new ruling, to only get half the picture or even an incomplete picture.
I got so mad about this glaring oversight in FinCEN’s logic that I decided to see if I could find an answer that wouldn’t cost institutions a ton of money in new hardware, staff, and training.
Sadly, I couldn’t find one. So I decided to create one.
Let me introduce RealSearch.com’s Legal Entity Responsible Officer search. It’s the first (and only) real-time, instant legal entity search database that scours both private and public data sources (including Secretary of State and the OFAC FinCen database) to give you the most accurate information about any non-public company you would need to research. There are literally millions of companies in this database - and you can instantly get a list of all responsible officers (including any executives) along with contact information!
Seriously, if you are at all worried about FinCEN’s new ruling, you need to check this out. (INSERT LINK). You can get a personal demo of our brand new responsible officer search so you can see just how powerful this information will be for your institution. Plus, we provide API access and batch matching - I’ve built this search specifically to comply with FinCEN so you can relax.
Check it out here and get your own personal demo of our system. (INSERT LINK) You’re going to be blown away.