FinCEN Beneficial Ownership Information (BOI) Reporting Requirements
Overview:
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) requires certain businesses to file a Beneficial Ownership Information (BOI) report. This report aims to enhance transparency and reduce financial crimes by identifying those who control or own a stake in various entities.
Who Must File:
Generally, domestic and foreign entities operating in the U.S. are required to file if they are created by a filing with a secretary of state or similar office. This includes corporations, limited liability companies (LLCs), and other similar entities. However, there are 23 types of entities exempt from filing, such as large operating companies (with over 20 employees and $5 million in revenue), regulated entities (e.g., publicly traded companies), and inactive entities meeting certain criteria.
Key Definitions:
- Beneficial Owner: Any individual who, directly or indirectly, exercises substantial control over an entity or owns or controls 25% or more of the ownership interests.
- Company Applicant: The individual who files the document that creates or registers the entity, relevant for new filings after January 1, 2024.
Deadlines:
- Existing Entities (formed before January 1, 2024): Must file their initial report by January 1, 2025.
- New Entities (formed on or after January 1, 2024): Must file within 30 days of formation or registration.
What to Report:
The report must include identifying information for each beneficial owner and company applicant:
- Full legal name
- Date of birth
- Address
- Identifying number from a legal document (like a passport or driver’s license)
Updates:
If there are changes to beneficial ownership, entities must file an updated report within 30 days of the change.
Penalties for Non-Compliance:
- Civil Penalties: Fines up to $500 per day for each day the violation continues up to $10,000.
- Criminal Penalties: Possible criminal fines of up to $10,000 and imprisonment for up to 2 years for willfully providing false information or failing to file.
Compliance Considerations:
Entities subject to reporting should establish internal protocols to keep track of beneficial ownership changes and ensure timely filing. Those exempt should maintain records to substantiate their exemption status in case of an audit or inquiry.
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