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The U.S. Financial Crimes Enforcement Network wants to extend the deadline for legal entities formed or registered in the U.S. after Jan. 1 of next year to name their beneficial owners under the Corporate Transparency Act, a recent regulatory filing indicates.

FinCEN filed the proposed deadline extension, entitled “Beneficial Ownership Information Reporting Deadline Extension for Reporting Companies Created or Registered in 2024,” with the Office of Information and Regulatory Affairs on Aug. 14. OIRA reviews notices of proposed rulemaking to avoid duplication or conflict with existing regulations.

The current policy, which the bureau finalized in September 2022, will give limited liability companies, trusts and 21 other types of legal entities formed or registered in the U.S. after Jan. 1, 2024, 30 days to submit the names, birthdates and other details of any individual who owns at least 25 percent of their shares or runs their operations on a day-to-day basis.

Entities already in existence by that date would have one year to comply with the requirement, which, pursuant to the Corporate Transparency Act, or CTA, aims to strip U.S. shell companies of anonymity that can hide illicit financial activity.

FinCEN has yet to publish the full text of its proposal to extend the deadline and did not respond to requests for a copy, leaving the specific length of the extension, the rationale behind it and other details unclear.

But the plan follows complaints from federal lawmakers and opponents of the CTA that the bureau lacks the time and resources necessary to formally advise an estimated 32 million entities on their particular filing obligation and also finish building the database, the Beneficial Ownership Secure System, to store the information.

“Given the complexities of this rule, it’s not surprising that FinCEN would delay the initial reporting date,” said Kevin Toomey, a partner at Arnold & Porter in Washington, D.C.

Congress raised the pressure on FinCEN to delay filing requirements this month when a prominent Democrat, U.S. Rep. Joyce Beatty (D-OH), joined Republicans in calling on the bureau to give businesses more time to comply.

Beatty introduced a bill with Rep. Zach Nunn (R-IA) on Aug. 2 that would extend the deadline for entities formed or registered after Jan. 1 to submit their ownership details from 30 days to 90 days.

Acting Director Himamauli Das has repeatedly told Congress that FinCEN requires more funding to implement the CTA, raising doubts that the bureau could build and test a database, finalize a rule for federal investigators and financial institutions to access the information, and establish a secure interface for them to do so—all by the turn of year.

“This interim extension might be their way of relieving newly formed companies from the impossible task of filing their beneficial ownership reports before FinCEN is capable of accepting them,” Jonathan Wilson, a business attorney in Atlanta and author of “The Corporate Transparency Act Compliance Guide,” wrote in an email to moneylaundering.com.

Business advocates have gone past simply complaining to Congress that the filing requirements are overly burdensome.

The National Small Business Association filed a lawsuit in November, calling the CTA “a law enforcement dragnet of sweeping proportions imposed by Congress on law-abiding U.S. citizens and permanent residents who own or control small businesses.”

A decision on the lawsuit, which aims to strike down the law altogether, is expected before the effective date.

Contact Fred Williams at fwilliams@acams.org