FinCEN Issues Initial Beneficial Ownership Information Reporting Guidance
On March 24, FinCEN published guidance materials for the new beneficial ownership reporting requirements taking effect on January 1, 2024. These new regulations require companies operating in the United States to disclose their beneficial owners to federal regulators and are designed to aid in crime prevention and enforcement by preventing criminal actors from hiding illicit money or other property behind anonymous shell corporations.
The following guidance materials are now available on FinCEN’s beneficial ownership reporting requirements to aid companies in complying with the regulations:
- Answers to Frequently Asked Questions about the reporting requirement
- One pagers on Key Filing Dates and Key Questions
- An Introductory Video and more detailed Informational Video about the reporting requirement
It is important to note that these guidance materials do not provide a comprehensive overview of the new regulations. Companies should still review the new regulations to ensure they properly comply.
“The Corporate Transparency Act, through its beneficial ownership reporting requirements, provides the historic opportunity to unmask shell companies and protect the U.S. financial system from abuse by money launderers, drug traffickers, sanctioned oligarchs, and other criminals. We are committed to making this transparency process as simple as possible, particularly for small businesses who may have never heard of or interacted with FinCEN before.”
– Himamauli Das, Acting Director of FinCEN
SEC’s Examination Division Issues Risk Alert Regarding Observations from Examinations of Newly-Registered Advisers
On March 27, the SEC’s Examination Division issued a risk alert discussing its focus areas during examinations of newly registered advisers and staff observations regarding, among others, compliance policies and procedures, disclosures and filings, and marketing practices.
The staff observed compliance policies and procedures that: (1) did not adequately address certain risk areas applicable to the firm, such as portfolio management and fee billing; (2) omitted procedures to enforce stated policies, such as stating the advisers’ policy is to seek best execution, but not having any procedures to evaluate periodically and systematically the execution quality of the broker-dealers executing their clients’ transactions; and/or (3) were not followed by advisory personnel. Additionally, the staff observed advisers’ annual compliance reviews that did not address the adequacy of the advisers’ policies and procedures and the effectiveness of their implementation.
The staff observed required disclosure documents that contained omissions or inaccurate information and untimely filings (i.e., material or annual form updates were not made within prescribed timeframes or at all). The disclosure omissions and inaccuracies were related to advisers’: (1) fees and compensation; (2) business or operations (including affiliates, other relationships, number of clients, and assets under management); (3) services offered to clients, such as disclosure regarding advisers’ investment strategy (including the use of models), aggregate trading, and account reviews; (4) disciplinary information; (5) websites and social media accounts; and (6) conflicts of interest.
Lastly, the staff observed adviser marketing materials that appeared to contain false or misleading information, including inaccurate information about advisory personnel professional experience or credentials, third-party rankings, and performance. Advisers were also unable to substantiate certain factual claims.
CFPB Improves Survey on Credit Cards
On March 21, the CFPB launched an improved survey of credit card issuers that can help consumers and families compare interest rates and other features when shopping for a new credit card. Upgrades to the CFPB’s terms of credit card plans survey are designed to increase price competition in the credit card market by allowing people to comparison shop for the best prices and products. The survey will also help smaller credit card issuers, which often offer the lowest rates, reach comparison shoppers. The data from the survey can also power digital tools and websites that people can use to find the best products for them, regardless of company size or marketing budget.
Beginning this week, credit card issuers will start reporting more details on the types of credit card plans they offer. The refresh of the CFPB’s terms of credit card plans survey includes updates that will help consumers easily identify lower interest rates, realistic interest rates, and credit card products that best fit their needs.
CFPB Confirms State Commercial Financing Disclosure Laws are Not Preempted by TILA
On March 28, following on its 2022 preliminary determination, the CFPB issued a preemption determination that commercial financing disclosure laws in California, New York, Utah, and Virginia are not in conflict or inconsistent with the federal Truth in Lending Act (TILA) and that commercial financing transactions to businesses, and any disclosures associated with such transactions, are beyond the scope of TILA’s statutory purposes, which concerns consumer credit.
FINRA Extends the “Maintaining Qualifications Program” Enrollment Window for Brokerage Reps U5’d Before March 15, 2022
Registered brokerage representatives historically had two years from their Form U5 filing date to re-register with another firm before their prior qualifications (examinations) would lapse. This two-year window often led to “parking” of registrations or other moves by industry personnel designed to avoid retaking industry exams.
Now, previously registered representatives who missed the prior deadline have until December 31, 2023 to enroll.
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