Understanding the New FinCEN Beneficial Ownership Information Requirements: What You Need to Know

What is Beneficial Ownership?

Beneficial ownership refers to the individuals who ultimately own or control a company, even if their names do not appear on official documentation. These individuals can exercise substantial control over the company, enjoy significant economic benefits, or both. Understanding and disclosing beneficial ownership is crucial for preventing money laundering, terrorist financing, and other financial crimes.

Key Requirements of the FinCEN BOI Rule

1. Who Must Report?

The new rule applies to most corporations, limited liability companies (LLCs), and other similar entities formed or registered to do business in the United States. However, there are some exemptions, including:

• Publicly traded companies

• Banks and credit unions

• Insurance companies

• Investment companies and advisors

• Charitable and non-profit organizations

These exemptions recognize that certain entities are already subject to stringent reporting and transparency requirements under other regulatory frameworks.

2. What Information Must Be Reported?

Entities required to report must provide detailed information about their beneficial owners. This includes:

• Full legal name

• Date of birth

• Residential or business street address

• Unique identifying number from an acceptable identification document (e.g., passport, driver’s license)

This information ensures that authorities can accurately identify and track individuals who have significant control or ownership interests in the company.

3. Timing of the Reports

New entities formed or registered after January 1, 2024, must file their BOI reports within 30 days of formation or registration. Existing entities have until January 1, 2025, to comply with the new requirements. Additionally, if there are any changes to the reported information (e.g., a change in beneficial ownership), entities must update their reports within 30 days of the change.

4. How to Report

Reports must be submitted electronically through the FinCEN’s online reporting system. The system is designed to be user-friendly, ensuring that even small businesses without extensive compliance departments can meet their obligations. Detailed instructions and support are available on the FinCEN website to assist with the reporting process.

5. Penalties for Non-Compliance

Failure to comply with the new BOI reporting requirements can result in severe penalties. These include civil penalties of up to $500 per day for each day the violation continues, and criminal penalties, including fines and imprisonment, for willful non-compliance. The stringent penalties underscore the importance of timely and accurate reporting.

How Ohm Law Firm Can Help

Navigating the new BOI requirements can be complex and time-consuming, especially for businesses unfamiliar with regulatory compliance. Ohm Law Firm specializes in helping businesses understand and meet their legal obligations efficiently and accurately. Our team of experienced legal professionals can:

• Review and Update Records: Assist in reviewing your current ownership and control structures to identify beneficial owners and ensure all necessary information is accurate and up-to-date.

• Implement Compliance Processes: Help establish robust internal processes for collecting, verifying, and reporting BOI, including staff training and the implementation of compliance software solutions.

• Ongoing Monitoring: Provide ongoing support to monitor changes in ownership and control, ensuring timely and accurate reporting of any updates to FinCEN.

By partnering with Ohm Law Firm, you can ensure compliance with the new BOI requirements, avoid costly penalties, and contribute to a more transparent and accountable business environment.

Conclusion

The introduction of the FinCEN Beneficial Ownership Information requirements marks a significant step towards greater financial transparency and the fight against financial crime. While the compliance burden may be challenging, the long-term benefits of a more transparent and secure financial system are substantial. Businesses must act now to understand their obligations, establish compliance processes, and ensure they are ready to meet the new reporting requirements.

Ohm Law Firm is here to support you through this transition, providing expert guidance and assistance to help you navigate the new regulatory landscape with confidence. Contact us today to learn how we can assist you in completing your BOI registration and maintaining compliance.