New FinCEN Proposal Strengthens Efforts to Combat Illicit Financial Activities – Los Angeles Income Tax Planning & Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on August 4, 2014

A new proposal submitted recently by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) aims to strengthen efforts to fight tax evasion, money laundering, terrorist financing, and other illicit financial activities.

The proposed rules, RIN 1506-AB25, were issued July 30, and include much more explicit customer due diligence requirements for financial institutions operating under the Bank Secrecy Act. The idea behind these efforts is to improve transparency by identifying the beneficial owners of legal entity customers. This identify information will allow the US to work more effectively with foreign governments when it comes to combatting offshore tax evasion.

These new proposed rules complement current efforts to combat tax evasion as exemplified by the Foreign Account Tax Compliance Act (FATCA). Under FATCA, foreign financial institutions are required to identify US account holders, including legal entities with significant US ownership, and report certain information about those account holders to the Internal Revenue Service (IRS). As most FATCA agreements involve reciprocal information-sharing between the US and the partner country, the new requirement to obtain beneficial ownership information will only improve FATCA operations between the US and its partner countries.

According to the proposal, requiring financial institutions to perform effective due diligence “is a critical aspect of combating all forms of illicit financial activity, from terrorist financing and sanctions evasion to more traditional financial crimes, including money laundering, fraud, and tax evasion.”

The proposal also lays out 4 key elements needed to satisfy the minimum standards for customer due diligence: 1) identifying and verifying the customers’ identity, 2) identifying and verifying the identity of beneficial owners and legal entity customers, 3) understanding the nature and purpose of customer relationships, and 4) conducting ongoing monitoring to maintain and update customer information and to identify and report suspicious transactions.

                Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

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