Beneficial Ownership Information Requirements

Commencing in 2024, any U.S. citizen who exercises substantial control over a reporting company or owns or controls at least 25 percent of the ownership interests of a business entity, foreign or domestic with FinCen.

Nicholas Hartney, EA, CAA

8/16/20232 min read

Title: Unveiling Transparency: Exploring the New Beneficial Ownership Rules


In an era where financial systems are becoming increasingly complex and global, ensuring transparency and accountability has never been more crucial. To tackle issues like money laundering, tax evasion, and corruption, governments and regulatory bodies around the world are continuously evolving their strategies. One significant development in this realm is the implementation of new beneficial ownership rules. These rules are designed to shed light on the true individuals who ultimately control and benefit from companies, promoting transparency and combating illicit financial activities.

Understanding Beneficial Ownership

Beneficial ownership refers to the individuals who ultimately reap the benefits of an entity, such as a company or trust, even if their names might not appear on official documents. These individuals wield significant control and influence over these entities, making them essential figures to identify for various regulatory purposes. In the past, the lack of stringent rules surrounding beneficial ownership has made it easier for unscrupulous actors to exploit the system for personal gain.

The Need for Change

The global financial system has long been a playground for those looking to exploit its complexities for illegal purposes. Money laundering, tax evasion, and terrorist financing are just a few of the grave issues that thrive in the shadows of corporate structures that obscure true ownership. The need for change has become increasingly evident as numerous scandals have come to light, underscoring the urgency to revamp the regulatory landscape.

Key Components of the New Rules

  1. Enhanced Disclosure Requirements: The new beneficial ownership rules require companies to provide more detailed and accurate information about their beneficial owners during the registration process. This information may include names, addresses, dates of birth, and even personal identification numbers.

  2. Centralized Registries: Many jurisdictions are setting up centralized databases or registries to store and manage beneficial ownership information. These registries are accessible to law enforcement agencies, regulatory bodies, and financial institutions to ensure efficient due diligence and enforcement.

  3. Ultimate Beneficial Owners (UBOs): The focus of these rules is on identifying ultimate beneficial owners—the individuals who hold a certain percentage of ownership or control within a company. This approach helps uncover complex ownership structures designed to hide the true beneficiaries.

  4. Stricter Penalties: To discourage non-compliance, the new rules often come with more severe penalties for failing to disclose accurate and timely beneficial ownership information. This serves as a strong incentive for companies to adhere to the regulations.

Benefits and Impacts

  1. Transparency and Accountability: By revealing the actual owners behind companies, these rules enhance transparency, making it harder for individuals to use corporate structures for illicit purposes.

  2. Fighting Financial Crimes: The improved visibility into ownership structures assists law enforcement agencies in combating money laundering, tax evasion, and other financial crimes.

  3. Investor Confidence: Transparent corporate environments foster investor confidence, as stakeholders can better assess the ethical and financial risks associated with their investments.

  4. Global Standardization: Many countries are adopting similar rules, creating a global standard for beneficial ownership disclosure that harmonizes efforts across borders.

Challenges and Considerations

  1. Data Privacy: Striking a balance between transparency and individuals' privacy rights is a challenge. Safeguarding sensitive personal information is a priority while ensuring transparency.

  2. Verification and Accuracy: Verifying the accuracy of the provided beneficial ownership information can be complex, especially when dealing with complex ownership structures.

  3. Resource Constraints: Smaller companies may struggle with the administrative burden and costs associated with compliance.


The new beneficial ownership rules represent a significant leap forward in the battle against financial crimes and unethical business practices. By shining a light on the true beneficiaries behind corporate entities, these rules enhance transparency, boost accountability, and contribute to a more secure and just global financial system. While challenges remain, the pursuit of transparency and integrity in the financial realm is an endeavor worth undertaking for the collective benefit of societies around the world.