In 2022, the Financial Crimes Enforcement Network (a bureau of the United States Treasury Department) issued a final ruling on companies' reporting of Beneficial Ownership Information to the federal government. The new law came into effect January 1, 2024.

Beneficial Ownership Information refers to identifying information about the individuals who directly or indirectly own or control a company. Beneficial Ownership Information is crucial for transparency, anti-money laundering efforts, and combatting financial crimes like money laundering, corruption, and terrorist financing. Many countries have initiated regulations mandating the disclosure of BOI to prevent anonymous ownership structures that could potentially facilitate illegal activities.

There are two types of reporting companies described in the final rule:

1. A domestic reporting company is defined as a corporation, LLC, or any entity that is created by filing with the Secretary of State or similar office.
2. A foreign reporting company is a corporation, LLC, or other entity created in a foreign country but registered to do business in the United States by filing with the Secretary of State or similar office.

A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial Beneficial Ownership Information report. A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier. Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.

FinCEN will begin accepting Beneficial Ownership Information reports on January 1, 2024. Beneficial Ownership Information reports will not be accepted before then.

Companies required to report are called reporting companies. There are two types of reporting companies:

1. Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
2. Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

There are 23 types of entities that are exempt from the reporting requirements. Carefully review the qualifying criteria before concluding that your company is exempt.

A beneficial owner is an individual who either directly or indirectly:

1. exercises substantial control over the reporting company, or
2. owns or controls at least 25% of the reporting company’s ownership interests

For each individual who is a beneficial owner, a reporting company will have to provide:

1. The individual’s name;
2. Date of birth;
3. Residential address;
4. An identifying number from an acceptable identification document such as a passport or U.S. driver's license, and the name of the issuing state or jurisdiction of identification document.

The reporting company will also have to report an image of the identification document used to obtain the identifying number in item 4.

1. The individual's name;
2. Date of birth;
3. Address; and
4. An identifying number from an acceptable identification document such as a passport or U.S. driver's license, and the name of the issuing state or jurisdiction of identification document.

The reporting company will also have to provide an image of the identification document used to obtain the identifying number in item 4. If the company applicant works in corporate formation, for example, as an attorney or corporate formation agent, then the reporting company must report the company applicant’s business address. Otherwise, the reporting company must report the company applicant’s residential address.

A FinCEN identifier is a unique identifying number that FinCEN will issue to an individual or reporting company upon request after the individual or reporting company provides certain information to FinCEN. An individual or reporting company may only receive one FinCEN identifier.

When an individual, acting as a beneficial owner or company applicant, obtains a FinCEN identifier, reporting companies have the option to report this identifier instead of the individual's typically required personal information on a Beneficial Ownership Information report.

No. There is no annual reporting requirement. Reporting companies must file an initial BOI report and updated or corrected BOI reports as needed.

A reporting company is required to submit a corrected BOI report if previously filed information was inaccurate and remains so. Corrections must be made within 30 calendar days from when the reporting company becomes aware of the inaccuracy. This includes inaccuracies concerning the reporting company itself, its beneficial owners, or company applicants. Filing an inaccurate report incurs no penalties if corrected within 90 calendar days from the original filing date.

Companies that willfully provide false information (including a false or fraudulent identifying photograph or document) or neglect to report by the filing deadline can face civil penalties of up to $591 for each day that the violation continues or remains unremedied. Additionally, they may be fined up to $10,000 and/or face up to 2 years of imprisonment.