This regulation, under the Corporate Transparency Act, requests the identification of individuals who benefit from a legal entity.
The goal of this regulation is to provide transparency around business ownership structures. It helps the federal government crackdown on financial crimes and fraud, such as money laundering, corruption, human trafficking, drug trafficking, tax fraud, and fraud against employees, customers, and other businesses.
The Corporate Transparency Act is legislation that changes the reporting for beneficial ownership information of business owners operating in the United States. It requests businesses identify and document any person who holds a 25% or greater ownership interest or exercises substantial control over the company.
Under the new regulation, reporting companies file information on each beneficial owner with the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). FinCEN has developed a database that holds information about each beneficial owner documented by a reporting company.