Starting January 1, 2024, the Financial Crimes Enforcement Network (FinCEN) mandates many U.S. companies to report information on individuals who own or control them. This requirement aims to enhance transparency and prevent misuse of financial systems. Non-compliance can result in penalties, but the process is designed to be simple, secure, and free.
Purpose
The Corporate Transparency Act, passed in 2021, seeks to combat illicit activities like using shell companies. Treasury Secretary Janet Yellen emphasized that this measure is crucial for protecting economic and national security by creating a centralized database of beneficial ownership.
Who Must Report
Two categories of reporting companies are:
- Domestic Reporting Companies: Includes corporations, LLCs, and others formed by filing with state offices.
- Foreign Reporting Companies: Entities formed under foreign law but registered to do business in the U.S.
There are 23 types of exempt entities. FinCEN provides a compliance guide to help companies determine their status.
Source: https://fincen.gov/boi-faqs#A_2
FinCEN also offers a Small Entity Compliance Guide, which includes a flowchart, and advises companies to thoroughly assess their status before making a decision.
Source: https://fincen.gov/boi-faqs#A_2
Deadlines
- Companies formed before January 1, 2024, must file by January 1, 2025.
- Companies formed in 2024 have 90 days after receiving verification and that your company’s registration is effective.
- Companies formed after January 1, 2025, have 30 days to file post-verification.
Key Points
Businesses can authorize others to file on their behalf. The filing process is a one-time requirement unless updates are needed. Any updates to beneficial ownership information previously filed with FinCEN must be submitted within 30 days.
Disclaimer:
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