New FinCEN Beneficial Ownership Reporting Requirements

Don’t Miss the Deadline: Submit Your Beneficial Ownership Information

Ensure your business complies with the latest regulations by submitting your Beneficial Ownership Information by January 1, 2025. Effective January 1, 2024, many companies in the United States will have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. They will have to report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury. These regulations promote transparency in corporate structures to combat money laundering, terrorist financing, and other financial crimes.

This new regulation will significantly impact businesses across the U.S., especially small and medium-sized enterprises. To avoid penalties and maintain smooth operations, it’s crucial to understand and adhere to these requirements.

>>> View the Beneficial Ownership Information Reference Guide here.<<<

Key Points:

• Deadline: January 1, 2025
• Who’s Affected: Many U.S. companies, especially small to medium-sized enterprises
• What to Report: Information about your beneficial owners (individuals who ultimately own or control the company)
• Where to Report: Financial Crimes Enforcement Network (FinCEN)
• Why It Matters: To comply with regulations aimed at preventing money laundering, terrorist financing, and other financial crimes

What You Need to Do:

1. Identify Your Beneficial Owners: Determine who the individuals are that ultimately own or control your company.
2. Gather Necessary Information: Collect the required information about your beneficial owners, such as:
   • Legal Name;
   • Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names;
   • Street address of the principal place of business;
   • Date of birth;
   • Taxpayer identification numbers
   • A copy of an identification with a photo (such as a driver’s license, passport, or state identification card)
3. Submit Your Report: File the report with FinCEN before the January 1, 2025 deadline.

Failure to comply with these regulations can result in significant penalties.

If you have any questions about this process or how to file this report, feel free to contact your local BankFirst branch.

By taking proactive steps to meet this requirement, you can help maintain the integrity of your business and contribute to a safer financial system.

What Is Beneficial Ownership?

Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company. Previously, these individuals could be obscured by complex corporate structures, making it difficult for regulators to identify a business’s true owners. The new BOI reporting requirements aim to increase transparency by mandating the disclosure of beneficial owners to FinCEN.

Why do companies have to report beneficial ownership information to the U.S. Department of the Treasury?

In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.

What Information Will Need To Be Reported?

• Legal Name
• Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names
• Street address of the principal place of business
• Taxpayer identification numbers

What information will a reporting company have to report about its beneficial owners?

For each individual who is a beneficial owner, a reporting company will have to provide:

• The individual’s name
• Date of birth
• Residential address
• An identifying number from an acceptable identification document such as a passport or U.S. driver’s license

This information needs to be reported on anyone that:

1. Exercises substantial control (Serves as an officer, director, or manager) over the reporting company
2. Owns or controls at least 25% of the reporting company’s ownership interests
3. Individual is considered an important decision-maker within the reporting company

Who Is Affected?

All domestic entities and any foreign entity registered to do business in the United States. Entities subject to BOI reporting include a corporation, limited liability company, or any other entity created by the filing of a document with the secretary of state of similar office in the United States. However, there are notable exemptions, including:

• Publicly traded companies
• Large operating companies with more than 20 full-time employees, over $5 million in gross receipts, and a physical presence in the U.S.
• Certain regulated entities, such as banks and credit unions
• Governmental authorities

If your business does not fall under these exemptions, compliance is mandatory.

Penalties for Non-Compliance

A person who willfully fails to comply with BOI reporting may be subject to civil penalties of $500 per day and criminal fines of up to $10,000 and/or imprisonment.

Ensuring Compliance

To ensure compliance with the new beneficial ownership (BOI) reporting requirements, business owners should follow these steps:

1. Identify Beneficial Owners: Determine all individuals who directly or indirectly own or control your company.
2. Gather Required Information: Collect necessary information for each beneficial owner, including legal name, date of birth, address, and government-issued identification.
3. File the BOI Report: Submit the report to FinCEN using their designated reporting system. Ensure the information is accurate and up-to-date.
4. Monitor Changes: Establish a process for monitoring changes in beneficial ownership and reporting them to FinCEN within the required timeframe.
5. Consult Experts: Seek guidance from legal or compliance professionals to ensure full understanding and adherence to the new requirements.

The New Era of Transparency

The new BOI reporting requirements mark a significant shift towards increased transparency in U.S. business ownership. While these regulations aim to combat financial crime, they also present new compliance challenges for businesses.

To avoid penalties and operational disruptions, it’s crucial to proactively assess the impact of these regulations on your business and take the necessary steps to comply.

If you have any questions about BOI reporting or how to file your report, please contact your local BankFirst branch.