The US Treasury has announced a 'customer due diligence' final rule, is asking Congress to pass beneficial ownership legislation, and has proposed regulations related to foreign-owned, single-member limited liability companies. None of its public communications on the subject mentions the name of Delaware once.

The CDD final rule adds a new requirement that financial institutions – including banks, brokers or dealers in securities, mutual funds, futures commission merchants, and introducing brokers in commodities – should collect and verify the personal information of the beneficial owners who own, control, and profit from companies when those companies open accounts. The final rule also amends existing Bank Secrecy Act regulations to make the obligations of these entities clearer and more onerous.

The rule contains three vital requirements. Financial firms must identify and verify the identities of the beneficial owners of companies that want to open accounts; they must understand the nature and purpose of 'customer relationships' to develop customer risk profiles; and they must monitor their behaviour continually, the better to identify and suspicious transactions and report them to the Government and, taking a so-called risk-based approach, to maintain and update information about them. With respect to the new requirement to obtain beneficial ownership information, financial institutions will have to identify and verify the identity of any individual who owns 25% or more of a legal entity, and an individual who controls the legal entity. The original proposal for the rule came out in 2014. According to the Wall Street Journal, it takes effect immediately.

The Treasury is also sending beneficial ownership legislation to Congress. It refers to this as "meaningful legislation that would require companies to know and report adequate and accurate beneficial ownership information at the time of a company’s creation, so that the information can be made available to law enforcement." To this end, it wants to oblige companies formed within the United States would be required to send it beneficial ownership information and face penalties for failure to comply.
 
The proposal also contains technical amendments to 'clarify the ability' of the Treasury's Financial Crimes Enforcement Network to collect information under so-called Geographic Targeting Orders, such as bank wire transfer information, which it does already. The most recent GTOs temporarily require certain US title insurance companies to record and report the beneficial ownership information of legal entities making “all-cash” purchases of high-value residential real estate. This January, FinCEN issued GTOs that covered the boroughs of Manhattan in New York City and Miami-Dade County in Florida - both hotbeds of money-laundering through property.  FinCEN might try to apply its GTOs to other areas.

The Treasury is also proposing to regulate to require each foreign-owned “disregarded entity,” which might be a foreign-owned single-member limited liability company (LLCs), to obtain an employer identification number (EIN) with the IRS. At present this narrow class of companies has no obligation to do so.