FinCEN Reporting Requirements - Beneficial Ownership Information
Reporting Requirement for Businesses
A new requirement from the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA) may impact your business. Many businesses will need to report beneficial ownership information directly to FinCEN.
A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.
A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.
Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.
What is the Beneficial Ownership Information (BOI) Requirement?
The new rule aims to increase transparency in corporate ownership and combat illicit financial activity, such as money laundering and fraud. FinCEN now requires certain businesses to file BOI reports that identify individuals who:
- Directly or Indirectly own 25% or more of the company
- Have significant control over the company’s operations or decisions
Who Needs to Report?
This requirement applies to most small businesses, like corporations and LLCs, and similar entities created in or registered to do business in the U.S. However, some are excluded, and the exceptions include:
- Publicly traded companies
- Certain large companies/businesses meeting specific criteria (e.g. having more than 20 employees and $5 million in annual revenue)
- Nonprofits and certain government entities
What information must be provided?
- Name, address, and date of birth of beneficial owners and decision-makers
- A copy of their ID (like a driver’s license or passport)
What Does This Mean for You?
This requirement is separate from the information you provide to your bank, it’s essential to stay compliant to avoid significant penalties, including fines or legal consequences. Your bank may still request similar details as part of ongoing Customer Due Diligence (CDD) requirements.
Under the Corporate Transparency Act (CTA), businesses that fail to comply with the new beneficial ownership reporting requirements may face serious penalties, including:
- Civil Penalties:
- Fines of up to $500 per day for each day the violation continues.
- Criminal Penalties:
- Fines of up to $10,000 and/or
- Up to 2 years in prison for willfully providing false or fraudulent information or willfully failing to file a report.
What Should You Do?
- Determine if your business needs to report.
- Gather the required information.
- Submit your report through FinCEN’s online system before January 1, 2025. — FinCEN provides a short instructional video.
It’s important to act promptly to avoid these penalties. If you’re unsure about your reporting obligations, consult your lawyer or legal counsel to ensure your business meets the requirements.
For more information, visit FinCEN’s website https://fincen.gov/boi