As the business landscape evolves towards greater transparency and stricter compliance requirements, companies and their beneficial owners must stay ahead of regulatory changes. One such critical change is the implementation of FinCEN’s Beneficial Ownership Information Reporting (BOIR) requirements. This guide will break down the reporting process to help you ensure your business remains in good standing.
The Financial Crimes Enforcement Network (FinCEN) has introduced BOIR to crack down on financial crimes such as money laundering and tax evasion. It mandates that certain entities report the identities of their beneficial owners to FinCEN. A beneficial owner is defined in two ways:
Substantial Control: An individual responsible for controlling, managing, or directing the company.
Ownership Interest: An individual who owns at least 25% of the ownership interest in the entity.
Small entities conducting business in the U.S. are the primary subjects of BOIR. These include LLCs, corporations, and similar structures, encompassing U.S. and foreign entities not listed on public stock exchanges. Notably exempt from this requirement are larger financial institutions and publicly traded companies that already operate under stringent reporting standards.
The reporting process can be complex, particularly for entities with multiple beneficial owners or intricate ownership structures. Here’s a step-by-step rundown:
The first step is determining if and when your company needs to report. Existing entities have until January 1, 2025, to file their initial reports, while new entities formed in 2024 need to register within 90 days, and those included in 2025 or later must report within 30 days.
Compile a list of all individuals who meet the criteria for being beneficial owners. Be thorough, as providing incomplete information can result in penalties.
For each beneficial owner, you will need to collect:
Full legal name
Date of birth
Residential street address (not a P.O. box)
A unique identifying number from an acceptable document (for instance, passport, driver’s license, or FinCEN identifier)
An image of the identifying document
Beneficial owners may apply for a FinCEN identifier to streamline the process for multiple filings. This unique I.D. is an alternative to submitting personal I.D. documents for each entity.
The report must include the required information for each beneficial owner and entity. It can be filed electronically through FinCEN’s designated portal.
Keep records of the information provided in the report and any correspondence with FinCEN. These should be accessible for at least five years from the filing date.
Submit updated reports to FinCEN upon any change in beneficial ownership or when the provided information becomes inaccurate.
Stay Informed: Regulations can change, so staying on top of any legal adjustments to the BOIR requirements is essential.
Security: Given the sensitive nature of the information, ensure it is handled and transmitted securely.
Professional Help: Consider seeking assistance from legal or accounting professionals specializing in compliance like us here at Walston Advisory Firm. Email us at [email protected]
Complying with BOIR can appear daunting, but with the help of professionals like us, it can be managed efficiently with careful planning and attention to detail. By understanding the process and preparing ahead of the deadline, you can confidently navigate these requirements and ensure your business meets its legal obligations. Remember, these measures are in place to foster a safer and more transparent business environment for all.