Efforts to Promote Transparency in the Ownership of Legal Entities
As you may be aware, over the past year there have been increased efforts worldwide to promote transparency in the ownership of legal entities, most notably by the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC). FinCen’s mission is to “safeguard the financial system from the abuses of financial crime, including terrorist financing, money laundering, and other illicit activity”, and by working with organizations such as OFAC, the Internal Revenue Service and other federal regulators, will continue to issue guidance on the risks of providing financial services to shell companies.
FinCen has issued a regulation to be followed by Corporation Registration Industry to prevent banned nationals from using corporate vehicles for illegal purposes. OFAC and other regulations also prohibit or limit U.S. persons (including businesses) from dealing with nationals, vessels, or entities from any of the following countries: Iran, Cuba, Iraq, Sudan, Western Balkans, Burma (Myanmar), Liberia, North Korea, Syria, and Zimbabwe.
OFAC has created a Specially Designated Nationals and Blocked Persons List (SDN List), which IBCF has access to and will search against prior to forming new entities, and has promulgated a regulation requiring that companies engaged in corporate registration to compare the names of Beneficial owners, Directors and Members against the Specially Designated Nationals and Blocked Persons List (SDN). The Regulation is effective as of October 2004.
OFAC regulations extend to:
All U.S. persons (including individuals and entities) are responsible for ensuring that they do not undertake a business dealing with an individual or entity on the SDN list. U.S. persons are:
• All U.S. citizens and permanent residents,
• All persons located in the United States,
• Any business organized under U.S. law, including U.S. branches and representative offices of foreign companies and over seas branches of U. S. companies, and
• In the case of the Cuba and North Korea programs, non-U.S. subsidiaries of U. S. companies.
Please click here for more information about FinCen’s efforts to “Promote Transparency in the Ownership of Legal Entities.”, and click here for more information on OFAC’s regulations for the corporate registration industry.
While this newsletter is meant to inform you on the ever-evolving regulatory measures taking place in the United States, and abroad, it is not intended to cause any alarm or major concerns for our clients. It is our intention to inform you that enhanced due diligence and record-keeping requirements will be undertaken by IBCF, as your service provider, in order to ensure that we remain in compliance. In addition, as part of our record keeping process, copies of proof of identity of an Entity’s beneficial owner(s) will need to be collected and maintained at the appropriate registered office during the entity formation process.
IBCF is closely monitoring the proposed regulations affecting our industry, and we’ll keep you abreast of any issues that present themselves in the future. As always, please do not hesitate to contact us at any time should you have any questions, comments or concerns.
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