Beneficial Owner Information
7 Things to Know About US Beneficial Ownership Information (BOI) Reporting
The US Corporate Transparency Act (CTA) was introduced to increase transparency in company ownership structures and combat illicit activities. It requires companies to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) to prevent misuse for money laundering, fraud, terrorism financing, and more.
In September 2022, FinCEN finalized a rule requiring many businesses to disclose their ownership and control data, with reporting starting on January 1, 2024.
Here are the key points you need to know:
1. What is Beneficial Ownership Information?
Beneficial Ownership Information (BOI) includes details about individuals who directly or indirectly own or control a company. This information helps businesses understand who they are dealing with, establish trust, and manage risks.
2. Why is BOI Important?
Accurate BOI makes it harder for wrongdoers to hide behind complex ownership structures. It is crucial for financial institutions, governments, and businesses to comply with regulations, manage risks, and prevent illicit activities.
3. What Does Substantial Control Mean?
Substantial control can be exercised in various ways, including:
- Being a senior officer (e.g., president, CFO, general counsel)
- Having the authority to appoint or remove officers or directors
- Making important decisions for the company
- Influencing significant company decisions
4. Who Has to File BOI?
The following companies must file BOI:
- **Domestic reporting companies**: Corporations, LLCs, and other entities created by filing with a US state office.
- **Foreign reporting companies**: Entities formed under foreign laws that have registered to do business in the US.
Exemptions include publicly traded companies, some nonprofits, and certain large operating companies.
5. Who Can Access BOI?
Authorized entities like federal, state, local, and tribal officials, and certain foreign officials can access BOI for national security and law enforcement purposes. Financial institutions can access it with consent from reporting companies.
6. When and How to File BOI?
Companies must file BOI electronically through the FinCEN website. Required information includes names, dates of birth, addresses, and identifying numbers like passports or driver’s licenses.
Key deadlines:
- **Before January 1, 2024**: File by January 1, 2025.
- **In 2024**: File within 90 days of registration.
- **On or after January 1, 2025**: File within 30 days of registration.
Any changes in ownership or control must also be reported within the specified timeframe.
7. Consequences of Not Filing or Mis-Filing BOI
Violations can lead to severe penalties:
- Up to $500 per day for ongoing violations
- Criminal penalties: Up to two years imprisonment and up to a $10,000 fine
Errors or omissions can be corrected within 90 days of the initial filing deadline, but firms face penalties for disregarding their BOI reporting obligations.
Summary
The BOI reporting framework under the CTA is crucial for transparency and accountability. Businesses must understand and meet their obligations, but the data submitted to FinCEN is not publicly available.