Navigating the New Beneficial Ownership Information Reporting Rule

Starting January 1, 2024, there's a new requirement for all companies incorporated or doing business in the United States. This mandate stems from the Corporate Transparency Act, which became law in 2021. It's overseen by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) pursuant to the regulations released by FinCEN.

The Beneficial Ownership Information Reporting Rule is aimed at combating various illegal activities like money laundering, corruption, and tax fraud. It necessitates that both domestic and foreign entities, termed as "reporting companies," disclose specific information about themselves and their beneficial owners.

Who does this apply to?

Reporting companies refer to corporations, LLCs, or other entities created through state or tribal filings, or foreign entities registered to conduct business within the U.S. There are exemptions, though. Entities such as securities reporting issuers, banks, governmental bodies, and more fall outside this reporting requirement.

What info needs to be reported?

Initial reports to FinCEN by reporting companies must include details like full legal names, addresses, jurisdiction of formation, and tax identification numbers. For individuals considered beneficial owners or company applicants, their personal information, including names, addresses, dates of birth, and unique identification numbers from specific documents, should be provided.

Who falls under beneficial owner or company applicant?

A beneficial owner is someone who directly or indirectly holds substantial control or at least 25% ownership of the reporting company. A company applicant is the individual responsible for filing to create or register the company.

When to file?

The deadlines vary based on when the reporting company was created or registered, ranging from 2024 to 2025, with specific time frames for filing reports.

How to file with FinCEN?

Starting January 1, 2024, reporting companies can file their reports directly with FinCEN.

Penalties for non-compliance?

Failure to comply with the reporting requirements can lead to civil and criminal penalties, including fines and imprisonment for willful violations.

Access to reported information?

FinCEN has outlined access rules that allow authorized recipients—like federal agencies, law enforcement bodies, financial institutions adhering to specific standards, and Treasury Department officials—to access this information under strict security and confidentiality measures.