As of January 1, 2024, there are new requirements for existing and newly created LLCs and Corporations that require a filing with FinCEN (Financial Crimes Enforcement Network).

The new law requires all owners of an entity to report their beneficial ownership interest or face possible daily fines. These changes are part of the broader effort to increase transparency and combat illicit finance, following the enactment of the Corporate Transparency Act (CTA).   It is crucial your company make a plan to comply with this new regulation.

Key Requirements:

1. Reporting Entities and Deadlines:

   • Existing Companies: Entities created or registered to do business in the U.S. before January 1, 2024, must file their initial Beneficial Ownership Information (BOI) reports by January 1, 2025.
   • New Companies: Entities created or registered in 2024 have 90 calendar days from their formation or registration to file their initial BOI reports.
     
     

2. Beneficial Ownership Information:

   • Reporting companies are required to disclose information about the individuals who ultimately own or control them (beneficial owners).
   • This includes the name, date of birth, address, and an identifying number from a valid document (like a U.S. driver's license or passport) of each beneficial owner.
     
     

3. Updates and Corrections:

   • Reporting companies must update their BOI report within 30 days of a relevant change (like a change in the company's legal name or ownership).
   • Any inaccuracies in previously filed reports must be corrected within 30 days of becoming aware of them.
     
     

4. Penalties:

   • Willful violations of these reporting requirements can result in civil penalties of up to $500 per day and criminal penalties, including fines and imprisonment.
     
     

5. Who is a Beneficial Owner?

   • A beneficial owner is someone who either exercises substantial control over the company or owns or controls at least 25% of the company's ownership interests.
     
     

6. FinCEN IDs:

   • FinCEN issues unique identifying numbers (FinCEN IDs) to individuals and entities. These IDs can be used in lieu of personal information in certain circumstances, aiding in compliance and reducing data security risks.
     
     

7. Compliance Assistance:

   • FinCEN provides resources like a Small Entity Compliance Guide and FAQs to assist businesses in understanding and complying with these requirements.
     
     

8. Submission Method:

   • Companies must use FinCEN's Beneficial Ownership Secure System (BOSS) for submitting BOI reports.

These changes represent a significant step in the U.S. government's efforts to enhance corporate transparency and combat illegal financial activities. The new rules aim to make it more difficult for bad actors to use anonymous companies for illicit activities by requiring more transparency about the individuals who control U.S. companies.

For more detailed information and to ensure compliance, entities should refer to the official FinCEN website and seek professional legal advice to prepare.