GAO Urges FinCEN to Expand Access to Beneficial Ownership Data to Fight Fraud

Beneficial ownership information (BOI) plays a crucial role in combating fraud, according to the U.S. Government Accountability Office (GAO), which is now urging the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to provide state watchdog agencies with broader access to this data.

In a new recommendation, the GAO emphasized the importance of identifying the real individuals behind corporate entities that participate in federal programs. “When it’s unclear who controls a company that’s participating in federal programs, there’s greater risk of fraud,” the GAO stated.

FinCEN, which serves as the U.S. Treasury’s anti-money laundering (AML) unit, has been called upon to support the Offices of Inspectors General (OIGs) by facilitating their access to the company registry that houses BOI. OIGs, which are oversight bodies monitoring the integrity of federal programs, have told the GAO that their ability to detect fraud is hindered by limited access to ownership data.

“GAO recommends that FinCEN communicate with OIGs, regarding OIGs’ company registry access and use,” the report said. However, in response to the recommendation, “FinCEN had no comment.”

The GAO’s recommendation follows a significant policy shift that critics say undermines transparency. In March, FinCEN issued an interim final rule that drastically curtails BOI reporting requirements for U.S.-based companies and individuals. The new rule would exempt more than 99% of corporate entities from having to report their beneficial ownership, despite longstanding concerns that anonymous companies are frequently used for illicit purposes such as money laundering.

The rollback comes just as the first wave of U.S. companies began reporting beneficial ownership information in 2024. According to the GAO, although OIGs currently have the ability to “request access” to the registry, the current framework is insufficient for effective fraud prevention.

“When information is unclear about the identity of the person who ultimately owns or controls a company that is participating in federal programs or operations, there is a heightened risk of procurement-, grant-, and eligibility-related fraud,” the GAO warned.

The report noted that OIGs often struggle with the limitations of existing data sources when trying to trace the true owners of entities involved in government-funded programs. “OIGs told GAO that they face challenges using the currently available data sources to identify the ‘beneficial owners’ of companies as part of their fraud detection and response efforts,” the agency wrote.

A majority of OIG offices responding to the GAO’s survey indicated that having reliable access to registry data “could be useful to their offices’ fraud detection and response efforts.”

Despite the lack of an official position from FinCEN on the GAO’s recommendation, the agency has signaled some willingness to cooperate. “FinCEN officials said they are open to discussions with OIGs on these issues,” the GAO concluded.

By fLEXI tEAM