Beneficial Ownership Information is defined as:  The identifying data of individuals who directly or indirectly own or control a company. Examples include: 

• Individual(s) Owners Name
• Home Address
• Business Address
• ID Verification 
• EIN and/ or other assigned Identification Numbers.

The main purpose of recording Beneficial Ownership Information, is to create legal and public transparency. Thus, making it more difficult for criminal or untruthful entities, to exploit shell companies for money laundering or other illicit activities.

On January 1, 2021, Congress enacted the Corporate Transparency Act (CTA), as part of the National Defense Authorization Act. The CTA focuses on reforms that anti-money laundering laws. These reforms are intended to help prevent and combat money laundering, terrorist financing, corruption, and tax fraud.   New business reporting requirements were established for companies in the USA, mandating them to submit beneficial ownership information to an agency called the: Financial Crimes Enforcement Network (FinCEN).

It is extremely important for Business Owners to be educated about these new requirements and to comply with them in a timely fashion. Completing your required Business Owner Information Report (BOIR) by submitting it to FinCEN, will ensure that you will avoid suffering legal and/or financial penalties.  For more information about the BOI Reporting Rule, please see www.fincen.gov/boi.

In 2021, The Corporate Transparency Act,

established guidelines, definitions & details of which type of businesses will need to submit Beneficial Ownership Information Reports (BOIR).: 

Definition of a Beneficial Owner: (Those required to submit reports)

A Beneficial Owner directly or indirectly controls at least 25% of the reporting company’s ownership and exercises substantial control over the reporting company interests. (i.e.: a senior officer, decision maker or authority to appoint / remove specific officers or a majority of directors. (For more specifics, see:  Beneficial Ownership Information Reporting Rule Fact Sheet )

Specific “identifiable information” tied to the Reporting Company, its Beneficial Owners, and Company Applicants will be required.  It is critical that the Applicant clearly understands what specific information needs to be gathered, copied and reported.  Below is a list of what to gather, copy and submit:

Reporting Company Information

Companies must report essential details about their organization that include: 

• Legal Name
• Trade Names
• Principal Place of Business (address)
• Jurisdiction of Formation or Registration
• Taxpayer Identification Number

Beneficial Owner Information

In most instances, for each Beneficial Owner, the Reporting Company must provide:

• Individual’s Name
• Date of Birth
• Residential Address
• Identifying numbers (applicable images of the identification documents)
• Additional Companies (applicable images of the identification documents)

Company Applicant Information

Companies created or registered on or after January 1, 2024, are required to report information about their Company Applicants. This includes:

• Applicants Name
• Date of Birth
• Address

• Identifying numbers (applicable images of the identification documents)

*Reporting companies created or registered before January 1, 2024, are not required to report their Company Applicants’ info.

When submitting Business Owner Information Reports, Beneficial Owners and Company Applicants must provide specific “proof-of-identification” documents, in image format.  Acceptable forms of identification include:

• Current/ Non-Expired U.S. Driver’s License(s)
• Current/ Non-Expired USA, or Foreign Government Issued Passport(s)

These are the current required filing deadlines:

• Individuals/entities who provide general accounting or legal services
• Banking institutions
• Businesses who have more than 20 full-time employees and generate more than 5 million in revenue, Publicly traded companies
• Many non-profit organizations
• Most Trusts

These organizations already have transparent ownership structures or are subject to other regulatory requirements.  (Reference: Small Entity Compliance Guide for more details).

Other types of legal entities, including certain trusts, are excluded from the definitions to the extent that they are not created by the filing of a document with a Secretary of State or similar office. FinCEN recognizes that in many States the creation of most trusts typically does not involve the filing of such a formation document.

Since January 1, 2024, both Domestic and Foreign companies, that do business in the USA, are required to submit Beneficial Ownership Information to FinCEN.  When submitting a BOIR, an entity will be asked to identify if they are a Domestic or Foreign Reporting Entity.  These would include and are identified, as follows: 

Domestic Reporting Companies include:  Corporations, LLCs & other entities created by filing a document with a Secretary of State or similar office in the USA.

Foreign Reporting Companies include: Foreign formed Entities, registered to do business in the USA.

No, these reports are required only once.  However, required information will need to be updated in these instances:

Reporting Exemptions:  Closure, Sale of Company or Changes in Ownership Status:

A company will need to report changes/ updates  in ownership-status, after their initial filing,  to establish an exempt status. Filing any ownership changes, in a timely manner, will ensure compliance with the Corporate Transparency Act requirements and avoid unwelcomed fines and fees.

Updating and Correcting Information

It is crucial for businesses to keep their Beneficial Ownership Information up-to-date. Required entities must file updates to their reports within 30 days of any changes 31 CFR 1010.380(a)(2)  as the info pertains to the company or its Beneficial Owners, including any change with respect to who is a beneficial owner of a reporting company, as well as any change with respect to information reported for any particular beneficial owner or applicant.

Additionally, companies must correct any inaccuracies in a report within 30 days of becoming aware of the inaccuracy or having reason to know about it. 

By adhering to the reporting deadlines, regularly updating and correcting information, and monitoring changes in status, companies can avoid negative consequences and contribute to the fight against financial crimes.

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In accordance with the Corporate Transparency Act, FinCEN may permit access to beneficial ownership information to:

• Federal Agencies (engaged in national security, intelligence, or law enforcement activity)
• State, Local, and Tribal law enforcement agencies with court authorization
• Officials at the Department of the Treasury
• Foreign Law Enforcement Agencies: Judges, prosecutors, authorities that submit a request via U.S.

   Federal Agency to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement.)

• Financial Institutions with customer due diligence requirements under applicable law (in order to facilitate compliance with those requirements)
• Federal Functional Regulators that supervise financial institutions with access to beneficial ownership information (in order to supervise compliance with customer due diligence requirements).

Beneficial Ownership Information reported to FinCEN is stored in a secure, non-public database. 

Use of rigorous information security methods and controls is used to protect this non-classified yet sensitive information at the highest security level.

Consent of Reporting Companies

It is crucial for businesses to be aware of their rights when it comes to sharing their Beneficial Ownership information with Financial Institutions. Reporting Companies have the authority to grant or deny consent for Financial Institutions to access their Beneficial Ownership Information. This consent requirement ensures that businesses have control over their sensitive information and can make informed decisions about sharing it.

Reference:

FinCEN, Oct 3, 2024:

https://www.fincen.gov/sites/default/files/shared/BOI-FAQs-QA-508C.pdf