FinCEN begins accepting beneficial ownership reports

The Treasury Department's Financial Crimes Enforcement Network started accepting beneficial ownership information reports at a new online registry that opened Monday requiring companies to disclose who truly owns or controls them.

The new BOI reporting requirement aims to deter money laundering, corruption and other forms of criminal activity by shell companies and was mandated by the Corporate Transparency Act of 2021. Existing companies will have one year to file, while new companies will be required to file within 90 days of their creation or registration.

Companies have lobbied to get the requirements relaxed or delayed. Last month, a group of roughly 80 lawmakers in Congress sent a letter to FinCEN urging it to delay the new rules, and before the congressional recess, the House passed a bipartisan bill called the Protect Small Business and Prevent Illicit Financial Activity Act, to delay the start of the rule by one year. The American Institute of CPAs supports the bill and has urged FinCEN to delay the rule.

Nevertheless, the rule stands for now unless the Senate also acts to delay the requirement, and the online registry is now open for BOI reports. Companies required to comply with the FinCEN BOI rules need to file their initial reports by the following deadlines: 

• Existing companies: Reporting companies created or registered to do business in the United States before Jan. 1, 2024 must file by Jan. 1, 2025.
• Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company's creation or registration is effective.

"The launch of the United States' beneficial ownership registry marks a historic step forward to protect our economic and national security," said Treasury Secretary Janet Yellen in a statement Monday. "Corporate anonymity enables money laundering, drug trafficking, terrorism and corruption. It harms American citizens and puts law-abiding small businesses at a disadvantage. Having a centralized database of beneficial ownership information will eliminate critical vulnerabilities in our financial system and allow us to tackle the scourge of illicit finance enabled by opaque corporate structures."

Ting Shen/Bloomberg

Beneficial ownership information reporting is not an annual requirement, the Treasury Department pointed out. A BOI report only has to be submitted once, unless the filer needs to update or correct information. In general, reporting companies has to provide four pieces of information about each beneficial owner:

• Name;
• Date of birth;
• Address; and,
• The identifying number and issuer from either a nonexpired U.S. driver's license, a non-expired U.S. passport, or a nonexpired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.

The company also needs to submit specific information about itself, such as its name(s) and address. Along with that, reporting companies created on or after Jan. 1, 2024, are required to submit information about the individuals who formed the company (that is, the "company applicants").
The Financial Crimes Enforcement Network offered guidance last month on the new BOI requirements. FinCEN has also posted a Small Entity Compliance Guide that helps small businesses navigate the requirements in plain language. Filers can also view informational videos and webinars about the BOI requirements, find answers to frequently asked questions, connect to the contact center, and learn more about how to report at www.fincen.gov/boi.