FinCEN Guidance is a secure, user-friendly online platform designed to streamline the process of completing and filing the Beneficial Ownership Information (BOI) Report for U.S. businesses. This service aligns with the requirements set forth by the Corporate Transparency Act (CTA), which mandates certain businesses disclose their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). The act aims to enhance transparency within the U.S. financial system to prevent and combat financial crimes such as money laundering and terrorism financing.
FinCEN Guidance's platform ensures the security of the data submitted by utilizing advanced encryption. It guides users through each step of the reporting process, providing clear instructions and help resources to ensure accurate and complete submissions. By facilitating a straightforward way to meet these reporting requirements, FinCEN Guidance not only helps businesses comply with federal regulations efficiently but also contributes to the broader efforts of FinCEN to uphold the integrity of financial systems and deter illicit activities. This comprehensive tool is essential for businesses navigating the complexities of beneficial ownership reporting, ensuring they provide detailed information about the individuals who own, control, or significantly influence company operations.
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About FinCEN, The Corporate Transparency Act and the Beneficial Ownership Information (BOI) Report
In an era where corporate transparency is paramount, the Financial Crimes Enforcement
Network (FinCEN) Beneficial Ownership Information (BOI) Report requirements serve
as a cornerstone for ethical business practices.
Passed by the United States Congress under the Corporate Transparency Act of 2021 (CTA), the law and regulations thereunder require the disclosure of certain individuals who directly or indirectly own or control a reportable company, effectively lifting the veil on opaque corporate structures. The CTA, aimed at deterring financial fraud and enhancing national security, allows certain Federal, State, local and Tribal officials, as well as certain foreign officials who submit a request through a U.S. Federal government agency, to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement. U.S. financial institutions will also have access to beneficial ownership information in certain circumstances, with the consent of the reporting company.
Emphasizing the need for stringent corporate accountability, the BOI guidelines require the identification of certain individual “beneficial owners”—those who directly or indirectly own or control a reporting company. While the BOI requirements cast a wide net, they consider practical nuances by exempting specific entities and individuals. Reporting companies are obligated to maintain the accuracy of their reported information, with the necessity to correct or update BOIs promptly to avoid penalties. These robust measures not only combat financial malfeasance but also instill a culture of integrity within the corporate fabric, ensuring that companies navigate the reporting landscape with due diligence and transparency.
FinCEN began accepting BOIs on January 1, 2024. Information about the BOI form is provided here and on FinCEN’s BOI webpage.
A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial BOI. A reporting company created or registered in 2024, will have 90 days to file its initial BOI. A reporting company created or registered from 2025 onwards, will have 30 days to file its initial BOI.
Following is an overview of FinCEN’s BOI requirements:
1. Business entities required to file a BOI are called “reporting companies.” There are two types of reporting companies:
- Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
- Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
At present, there are 23 types of business entities that are exempt from the BOI requirements. Our FinCEN Guidance on-line wizard can guide you through any of the 23 reporting company exemptions to determine if any apply.
The following table summarizes the 23 exemptions:
- Securities reporting issuer
- Governmental authority
- Bank
- Credit union
- Depository institution holding company
- Money services business
- Broker or dealer in securities
- Securities exchange or clearing agency
- Other Exchange Act registered entity
- Investment company or investment adviser
- Venture capital fund adviser
- Insurance company
- State-licensed insurance producer
- Commodity Exchange Act registered entity
- Accounting firm
- Public utility
- Financial market utility
- Pooled investment vehicle
- Tax-exempt entity
- Entity assisting a tax-exempt entity
- Large operating company
- Subsidiary of certain exempt entities
- Inactive entity
2. A reportable beneficial owner is an individual who either directly or indirectly: (1) exercises “substantial control” over the reporting company, or (2) owns or controls at least 25% of the “ownership interest” in a reporting company. There are five instances in which an individual who would otherwise be a reportable beneficial owner qualifies for an exception. In those cases, the reporting company does not have to report that individual as a beneficial owner to FinCEN. Our FinCEN Guidance on-line wizard can guide you through the five beneficial owner exceptions to determine if any apply.
3. An individual can exercise substantial control over a reporting company in four different ways. If the individual falls into any of the categories below, the individual is exercising substantial control:
- The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive office, chief operating officer, or any other officer who performs a similar function).
- The individual has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.
- The individual is an important decision-maker for the reporting company.
- The individual has any other form of substantial control over the reporting company.
4. An ownership interest is generally an arrangement that establishes ownership rights in the reporting company. Examples of ownership interests include shares of equity, stock, voting rights, or any other mechanism used to establish ownership in the reporting company.
5. Reporting companies created or registered on or after January 1, 2024, will need to report their “company applicants.” A company that must report its company applicants will have only up to two individuals who could qualify as company applicants:
- The individual who directly files the document that creates or registers the company; and
- If more than one person is involved in the filing, the individual who is primarily responsible for directing or controlling the filing.
6. A reporting company will have to report:
- Its legal name;
- Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names;
- The current street address of its principal place of business if that address is in the United States (for example, a U.S. reporting company’s headquarters), or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States (for example, a foreign reporting company’s U.S. headquarters);
- Its jurisdiction of formation or registration;
- Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction); and
- Whether it is filing an initial report, or a correction or an update of a prior report.
7. For each individual who is a beneficial owner, a reporting company will have to provide:
- The individual’s name;
- Date of birth;
- Residential address;
- An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document; and
- An image of the identification document used
8. If applicable, for each individual who is a company applicant, a reporting company will have to provide:
- The individual’s name;
- Date of birth;
- Business or residential address;
- An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document; and
- An image of the identification document used
9. Reporting companies must file an initial BOI depending on when the reporting company was formed or registered, and file updated or corrected BOIs as needed. If the reporting company was formed or registered before January 1, 2024, it must file its initial beneficial ownership information report by January 1, 2025. If the reporting company is formed or registered to do business in the United States on or after January 1, 2024, then it must file its initial beneficial ownership information report within 30 days after receiving actual or public notice that its creation or registration is effective.
10. FinCEN has been criticized for not making the public fully aware of their obligations to report, update, and correct BOIs. However, FinCEN understands this is a new reporting requirement. If you correct a mistake or omission within 90 days of the deadline for the original report, you may avoid being penalized. However, FinCEN may impose civil and criminal penalties if you disregard your BOI obligations.
