The Financial Crimes Enforcement Network (FinCEN) Beneficial Ownership Interest Reporting Rule and How It May Affect Your Business

On Behalf of | Dec 11, 2023 | business law |

In an effort to track down financial fraud, the Financial Crimes Enforcement Network (FinCEN), an agency of the Federal government, has imposed new reporting requirements of most corporations and entities. The rule requires companies to file what is known as a “BOI Report,” disclosing the interest of substantial stakeholders of certain companies and other entities. This new rule affects small businesses, so it is important to know what the requirements are, who must comply with them, and the appropriate deadlines. The following are some frequently asked questions about the new requirements.

Is My Company a Reporting Company?

There are two types of reporting companies: domestic and foreign. The domestic reporting companies would be any entity created by the filing of a document with a secretary of state, such as corporations and LLCs but not limited to those. Foreign reporting companies would be those entities such as corporations or LLCs (or others) registered to do business in any state by the filing of documents in the secretary of state or a similar office. These will include LLPs, LLLPs, business trusts, and most limited partnerships in addition to corps. and LLCs.

Who Is Considered a Beneficial Owner of My Company?

To be a “beneficial owner,” an individual would either (1) exercise substantial control over a reporting company, or (2) own or control at least 25% of the ownership interests. There are different types of individuals exempt from being defined as a “beneficial owner,” as well as several different categories of entities that are exempt from reporting entirely. However, FinCEN expects for most companies there should be a fairly simple structure which makes it easy to identify who qualifies as a “beneficial owner.” For more complicated business structures, it is best to consult with an attorney to be certain that all those who may qualify as “beneficial owners” are reported as such.

Additionally required to be reported are those considered “company applicants.” These are two persons: (1) the individual directly filing the document either creating the entity (in the case of domestic companies) or registering the entity to do business in the United States (foreign companies); and (2) the individual primarily responsible for directing the filing of the relevant document. If a company was in existence or registered when this reporting rule goes into effect on January 1, 2024, then that company would not be required to identify and report the “company applicants.” Such “company applicants” also are not necessary to be updated once the company is formed or registered after the effective date. Where necessary to report company applicants, the same information required of beneficial owners listed above should be provided for each company applicant.

What Do I Need to Report?

The report should contain four pieces of information about each beneficial owner: (1) the full legal name, (2) birthdate, (3) address, and (4) a unique identification number along with an image of the acceptable identification document (e.g., passport number along with photocopy of passport).

When Do I Need to Report?

This requirement goes into effect on January 1, 2024. Companies in existence or registered prior to January 1, 2024 will have one year to file the initial report. Any company created or registered after January 1, 2024 will have 30 days following the date on which they receive notice of their creation or registration to file their initial reports. If any company becomes aware of or has reason to know that information in a prior report is inaccurate, they have 30 days to report a change.

How Do I Report This Information?

If your company is required to file a BOI Report, you must do so through a secure filing system through the Financial Crimes Enforcement Network (FinCEN). This system will be available on January 1, 2024. More guidance from FinCEN is forthcoming as the new year approaches. You may access that information at:

Where Does the Information Go?

All of this information will be stored in a “secure, non-public database” titled the Beneficial Ownership Secure System (BOSS). Companies required to report under this rule should submit all required information to this system electronically, after the effective date of January 1, 2024. There have been reports of scams involving attempts to solicit information from individuals and entities subject to reporting requirements—do not click on any links or scan any QR code provided to you in an email or other form of message.

It is important to reach out to an attorney not only to identify such individuals whose information would be necessary to report (or whether your business is exempt), but to make sure that your business elsewise is set up as cleanly as possible so that there are no questions regarding ownership or liabilities. Reach out to the talented and experienced attorneys at Storm & Piscopo, P.C. today to set up an initial consultation.