The Financial Crimes Enforcement Network (FinCEN) published its recent guidance materials to aid the public and businesses with upcoming beneficial ownership information reporting requirements. These regulations will take effect on January 1, 2024. Beneficial ownership information reports will not be accepted before then.
Why Companies Report Beneficial Ownership Information to the U.S. Department of the Treasury
Few states require companies to disclose information about beneficial owners. This lack of transparency allows criminals, corrupt officials, and other bad actors to conceal their identities and launder illicit funds through the United States using shell and front companies. The inaccessibility of beneficial ownership information makes it hard for law enforcement to track and prosecute criminal activity. Therefore, Congress enacted the Corporate Transparency Act (CTA) and FinCEN in 2021 to address this problem, enhance financial transparency, and protect small business data.
What Companies Report Beneficial Ownership Information to the FinCEN
The FinCEN requires many domestic and foreign corporations, limited liability companies, and other entities registered in the United States to report information about their beneficial owners. The FinCEN defines a beneficial owner as anyone who directly or indirectly exercises substantial control over the reporting company or rightfully owns at least 25 percent of the ownership interests.
FinCEN requires the name, birthdate, and address. Additionally, it will need to provide a unique identifying number. This will need to be done electronically through a secure filing system that will be available via FinCEN’s website. This system is still currently being developed but will be deployed before your report must be filed.
No company will have more than two company applicants. It will not charge a fee when beneficial ownership information reports are submitted.
Reporting Requirement Exemptions
The CTA exempts 23 types of entities from the beneficial ownership information reporting requirement. The federal and state government already regulates many of these exempt entities. For more information on specific exemption criteria, consult the Beneficial Ownership Information Reporting Regulations.
Here to Help
For the most accurate and current information on reporting requirements, consult official sources such as the FinCEN website or contact a financial consultant.
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