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  • Writer's pictureMilan Solarz-Patel

FinCEN and Trusts: Navigating Beneficial Ownership Reporting

Updated: Dec 7, 2023


For more information about FinCEN BOI reporting, please see: FinCENguidance.com


Trusts and their obligations to disclose ownership information to the Financial Crimes Enforcement Network (FinCEN) in the context of the Beneficial Ownership Information (BOI) requirements is a nuanced topic. The requirements are part of the efforts to combat money laundering, financing of terrorism, and other illicit financial activities. Background on FinCEN and BOI Requirements

  • FinCEN's Role: The Financial Crimes Enforcement Network is a bureau of the U.S. Department of the Treasury. Its mission includes safeguarding the financial system from illicit use, combating money laundering, and promoting national security through the collection, analysis, and dissemination of financial intelligence.

  • Beneficial Ownership Information (BOI): The BOI requirements are designed to increase transparency in the ownership structures of legal entities. This helps in identifying the natural persons (beneficial owners) who ultimately own or control these entities. The aim is to prevent the misuse of legal entities for purposes like money laundering or financing terrorism.

Trusts and BOI Disclosure

  • Trust Structure: A trust is a legal arrangement where a trustee holds and manages assets on behalf of beneficiaries. Trusts are used for various purposes, including estate planning, asset protection, and tax planning.

  • Disclosure Requirements for Trusts: Traditionally, trusts have been subject to less stringent disclosure requirements compared to corporations or LLCs. This is partly because trusts are often viewed as private family arrangements. However, the growing concern over the misuse of trusts for illicit activities has led to calls for greater transparency.

  • Current Regulation: As of my last update in April 2023, trusts may not be uniformly required to disclose beneficial ownership information to FinCEN. The specific requirements can depend on the nature of the trust, its activities, and the jurisdictions involved.

  • Variations by Jurisdiction: In the U.S., certain types of trusts may need to report ownership information under the Bank Secrecy Act or other regulations, especially if they engage in financial transactions or operate in a commercial capacity. However, this is not universally applicable to all trusts.

  • International Standards: Globally, there is a trend towards increased transparency. The Financial Action Task Force (FATF), an international body setting standards for combating money laundering, recommends that countries ensure adequate, accurate, and timely information on the beneficial ownership of legal persons (including trusts) is available.

While trusts have traditionally enjoyed a degree of privacy in terms of ownership disclosure, there is a growing trend towards greater transparency, both in the U.S. and internationally. The specific requirements for trusts to disclose beneficial ownership information to FinCEN under the BOI guidelines can vary, and it's crucial for trustees and beneficiaries to understand the regulations applicable to their specific situations.

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