New Beneficial Owner Information Reporting Requirements Under the Corporate Transparency Act
Our team recently hosted a webinar on the new Beneficial Owner Information Reporting requirements that went into effect on January 1, 2024. Links to the webinar and presentation material are provided below, and a summary of the information is provided in the text below. We recommend that you review this information to understand how these new requirements impact you, as it is applicable to all U.S. registered corporations, LLCs, or similar entities, with very limited exceptions.
Click Here for Link to Webinar > Passcode:51Tw24@C
Click Here for Link to Presentation PDF
What has changed?
- In 2021, Congress enacted the Corporate Transparency Act to curb illicit finance. This law requires many companies doing business in the United States to report information about who ultimately owns or controls them.
- Effective January 1, 2024, many companies in the United States must report information about their beneficial owners-the individuals who ultimately own or control the company-to the Financial Crimes Enforcement Network (FinCEN) a bureau of the U.S. Department of the Treasury.
- FinCEN will store BOI reports in a centralized database and only share this information with authorized users for purposes specified by law.
- The new FinCEN database, called the Beneficial Ownership Secure System (the “BOSS”), will collect the names, date of birth, addresses, and identification documents of individuals who own at least a 25% equity stake in each reporting company or who exercise substantial control over the reporting company.
- The purpose of the dataset is to provide U.S. law enforcement with the resources to crack down on anonymous shell companies, money launderers, terrorists, and criminals.
How Does this Impact Me?
- Although the CTA is intended to assist law enforcement in its anti-money laundering and counter-terrorism efforts, it is widely applicable, with very limited exception, all U.S. registered corporations, LLCs, or similar entities, whether foreign or domestic.
- FinCEN estimates that 32.6 million entities will be subject to the CTA reporting rules when they go into effect on January 1, 2024, and that an additional 5 million entities will be required to comply with the CTA each year thereafter.
- Civil and Criminal penalties apply to the failure to report complete or updated beneficial ownership information reports, including penalties of up to &500 per day and criminal penalties of up to $10,000, two years’ imprisonment, or both.
- Beneficial ownership information reporting is not an annual requirement. Unless a company needs to update or correct information, a report only needs to be submitted once.
When Do I Report?
- If your company was created or registered prior to January 1, 2024, you will have until January 1, 2025 to report BOI
- If your company is created or registered in 2024, you must report BOI within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective
- If your company is created or registered on or after January 1, 2026, you must file BOI within 30 calendar days after received actual or public notice that its creation or registration is effective
- Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days
Recommendations:
- Make a plan to comply with the deadlines that are applicable to your situation
- Contact your business attorney (or engage one) to keep company legal documents up to date and consistent with BOI reporting
- Formally dissolve inactive entities through Secretary of State offices
- Add the FinCEN BOI reporting to the list of updates required when there is a change in contact information for the reporting company and/or beneficial owners of the company
- Create a standard process for notification and collection of contact information updates for beneficial owners to make sure updates are reported timely to Fin CEN
- Make sure information is consistent between state filings, FinCEN reporting, and bank accounts.
Please do not hesitate to reach out with any questions as we are happy to help!