Understanding The New FinCEN Reporting Requirements

The Financial Crimes Enforcement Network of the U.S. Department of the Treasury  (FinCEN) has set new rules for reporting beneficial ownership information (BOI). These rules are part of the Corporate Transparency Act (CTA). Businesses must understand these rules to ensure compliance and avoid significant financial penalties. 

As of January 1, 2024, the BOI reporting rule requires covered companies to report who their owners are. The reporting dates will change by year. Take the timelines set forth below seriously because companies will face significant consequences —such as fines and penalties—for failing to submit their reports. 

What Your Business Needs to Know

Starting January 1, 2024, companies created or registered in the U.S. must report their beneficial owners to FinCEN within 90 days of their creation or registration. For companies formed after January 1, 2025, the reporting deadline is 30 days (as highlighted in the opening section). 

Companies formed before January 1, 2024, have until January 1, 2025, to file their reports through FinCEN. A reporting company must provide information about the company, its beneficial owners, and the individuals who file the registration documents. The required information includes names, addresses, and identification numbers. This information must be submitted through FinCEN’s Beneficial Ownership Secure System (BOSS). Companies must stay updated on the availability of reporting forms and ensure they collect all necessary information in advance. Companies should also plan for timely updates to their BOI reports whenever there are changes in ownership or control. 

There are 23 categories of exemptions, including large operating companies, public companies, and certain regulated entities like banks and insurance companies. However, many private companies will not qualify for these exemptions and must comply with the reporting requirements. Failure to comply with the BOI reporting rules can result in severe penalties. If you deliberately provide false information or do not report on time, it can lead to fines of up to $10,000 and imprisonment for up to two years. Companies must determine whether they fall under any of the exemptions. If not, they should gather the necessary information to meet the reporting deadlines. 

Businesses should also monitor for any updates or changes to the requirements. Early preparation can avoid last-minute complications and ensure compliance. Understanding the details of the BOI rule is essential for smooth and timely reporting.

The Purpose of the Reports

FinCEN’s BOI reporting rules aim to increase transparency and prevent companies from being complicit in illegal activities. FinCEN tracks the individuals who ultimately own or control companies. They intend to use this information to target companies that are fronts for illicit activities. The goal is to create a more transparent business environment where ownership and control structures are not hidden. It will also serve as a deterrent for criminals from exploiting anonymous companies for illegal purposes.

Additionally, these reports can aid international efforts to combat financial crimes by providing a clearer picture of cross-border ownership. With better transparency, it becomes harder for illicit actors to hide their activities behind complex ownership structures. Moreover, it fosters trust in the business community by holding companies accountable for their ownership and control.

Be Diligent and Speak to Legal Counsel 

Businesses should start preparing for these requirements now. Understanding whether your company is exempt and gathering the necessary information will help ensure timely compliance. Staying informed about any updates from FinCEN will also be crucial as the implementation date approaches. For personalized guidance on FinCEN’s BOI reporting requirements, consider scheduling a consultation with Rodriguez-McCloskey PLLC. Our team is ready to help you navigate these new regulations. Contact us today for a 30-minute consultation.