Did you know that nearly 30% of small businesses are affected by financial crimes each year? To combat this, the Financial Crimes Enforcement Network (FinCEN) is introducing a new requirement for businesses to report Beneficial Ownership Information (BOI). This mandate aims to enhance transparency and fight against financial crimes such as money laundering and terrorist financing.

Here’s what you need to know:

Why It’s Important

The primary goal of the BOI reporting requirement is to create a clearer picture of who owns and controls legal entities operating in the United States. This transparency is crucial for:
• Preventing Financial Crimes: By knowing the individuals behind companies, it becomes easier to detect and prevent illegal activities.
• Protecting Your Business: Compliance with these regulations helps protect your business from being inadvertently involved in financial crimes.
• Enhancing Trust: Transparency fosters trust in the financial system, benefiting all participants, including your business.

Who Needs to Report

The BOI reporting requirement applies to a wide range of entities, including:

• Corporations
• Limited Liability Companies (LLCs)
• Limited Partnerships (LPs)
• General Partnerships (GPs)
• Business Trusts
• Statutory Trusts
• Any Other Entity Created by Filing a Document with a Secretary of State or Similar Office

However, there are some exceptions. Certain entities, such as those already subject to extensive federal or state regulation (e.g., banks, credit unions, insurance companies), may be exempt from reporting requirements.

Reporting Deadline

The deadline for reporting Beneficial Ownership Information depends on your business’s circumstances:

• Existing Entities: Companies that were registered before January 1, 2024, must submit their BOI to FinCEN by December 31, 2024.
• New Entities: Businesses formed or registered after January 1, 2024, will have 30 days from the date of formation to report their BOI.

How to Report Beneficial Ownership Information

Reporting BOI to FinCEN involves the following steps:

1. Identify Beneficial Owners: Determine the individuals who meet the criteria of a beneficial owner. Generally, a beneficial owner is anyone who, directly or indirectly, owns 25% or more of the company or exercises substantial control over it.
2. Gather Required Information: Collect necessary details about each beneficial owner, including name, date of birth, address, and a unique identifying number (e.g., passport or driver’s license number).
3. Submit the Information: Use FinCEN’s online reporting system to submit the BOI. Ensure that all information is accurate and up-to-date.

Consequences of Non-Compliance

Failure to report Beneficial Ownership Information can lead to significant repercussions, including:

• Penalties and Fines: Businesses that do not comply with BOI reporting requirements may face substantial fines and penalties.
• Legal Action: Non-compliance can result in legal action against the business and its owners, potentially leading to further financial and reputational damage.
• Operational Disruptions: Inadequate compliance can lead to disruptions in business operations, as authorities may take measures to enforce regulations.

Who to Contact with Questions

If you have any questions or need assistance with the BOI reporting process, you can contact FinCEN directly:

• FinCEN Resource Center: For general inquiries, you can reach out to the FinCEN Resource Center at 1-800-767-2825 or via email at FRC@fincen.gov.
• FinCEN’s Website: Visit FinCEN’s official website at www.fincen.gov for detailed information and guidance on BOI reporting requirements.

Although we aren’t able provide specific guidance related to your business’s reporting requirements, it’s our goal to keep our business customers informed of upcoming changes that could impact you and your business. Your diligence in keeping up with these new requirements is appreciated.

This article is explanatory only and does not supplement or modify any obligations imposed by statue or regulation.