The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury whose purpose is to combat financial crimes like money laundering. In 2021, the Corporate Transparency Act (CTA) was enacted as part of the Anti-Money Laundering Act of 2020. This law requires each U.S. and foreign company to file a report to identify its beneficial owners or risk non-reporting FinCen BOI penalties.
In 2022, FinCEN published its final regulations on Beneficial Ownership Information (BOI) Reporting Requirements. Effective January 1, 2024, existing companies will have one year to file their initial reports identifying their beneficial owners: reports for these companies will be due on January 1, 2025. New companies that are created or registered after January 1, 2024 will have 30 days to report.
The disclosed information will be shared with appropriate authorities and financial institutions to prevent criminals from unlawfully benefiting. Companies that comply and provide this information will actively contribute to the fight against concealed criminal actions.
What are the FinCen BOI penalties for not reporting your beneficial ownership information?
Companies who willfully provide false information (including a false or fraudulent identifying photograph or document) or neglect to report by the filing deadline can face a civil BOI penalties of up to $500 for each day that the violation continues or has not been remedied. In addition, they can be fined up to $10,000 and/or face up to 2 years of imprisonment.
Does your business need to report its beneficial ownership information?
FinCEN estimates that the number of current US businesses that will need to report is in the tens of millions! Most of these organizations will be small and midsize businesses, so yes—it’s likely that your business will need to report.
There are two main types of companies that need to share their beneficial ownership info with FinCEN: domestic and foreign. Domestic reporting companies are corporations, LLCs, and any other groups that got official paperwork from a state or Indian tribe to do business. Foreign reporting companies are corporations, LLCs, or other groups from foreign countries. They need to have legal status from their home nation and be officially allowed to do business in the US through paperwork from a state or Tribal office.
If your company got its start or got permission to do business by getting official papers from a state or Indian Tribal office (like a secretary of state), you’re in the reporting boat, unless there’s an exemption that applies. The CTA has a list of 23 types of entities that don’t need to share this info. You can find the full list in FinCEN’s FAQs about sharing ownership info.
SixFifty has a beneficial ownership information worksheet
Don’t get caught without a beneficial ownership report!
The legal experts at SixFifty have created a FinCEN Beneficial Ownership Worksheet to help you determine whether your business needs to comply with the FinCEN beneficial ownership requirements. This tool will walk you through a series of questions about your business just like a lawyer would. We then map your answers onto the FinCEN framework to let you know whether you need to report your ownership structure.
The end product is a document that shows that you took the obligation seriously, whether you need to comply or not. You should print, sign, and retain the completed worksheet for recordkeeping purposes. Showing that you tried in good faith to determine whether to comply can help you to avoid serious fines and BOI penalties.