Davis Polk partner Dan Stipano discussed with MoneyLaundering.com the potential effect of the Corporate Transparency Act’s beneficial ownership information (BOI) reporting rule on U.S. states with strong corporate-secrecy protections. The BOI rule will require certain legal entities to file reports providing information about the entity, its beneficial owners and, in some cases, its company applicants to the Financial Crimes Enforcement Network (FinCEN).

“If the primary reason [to register in a certain state] is to keep the beneficial owners of a company completely confidential, that’s going to be out the window,” Dan explained.

He added that although the Corporate Transparency Act will limit the power of state governments to ensure corporate anonymity, the Treasury’s FinCEN will still struggle to enforce the measure, given that tens of millions of entities will be covered by the rule.

The BOI rule is scheduled to become effective on January 1, 2024.

“New LLCs Spike in Wyoming, Raising Financial Crime Concerns,” MoneyLaundering.com (September 27, 2023) (subscription required)
 

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