Broker Check

New FinCEN Rule for Business Owners

The new FinCEN rule, effective from January 1, 2024, mandates certain U.S. and foreign entities registered to do business in the United States to report Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN). This rule is part of the Corporate Transparency Act (CTA) and aims to enhance the transparency of business ownership to reduce financial crimes.

Key Components of the Rule:

  1. Reporting Companies: This includes certain U.S. legal entities and foreign entities registered to do business in the United States.

  2. Beneficial Ownership Information (BOI) Reporting:

    • Company Information: Full legal name, trade names, address, jurisdiction of formation, and taxpayer identification number.
    • Beneficial Owner Information: Full legal name, date of birth, address, and a unique identifying number and image from an ID document (e.g., US passport, state driver’s license).
    • Company Applicant Information: For companies created or registered after January 1, 2024, this includes information about individuals who file the creation or registration documents.
  3. Who is a Beneficial Owner?: An individual who directly or indirectly exercises substantial control over a reporting company or owns or controls at least 25% of the ownership interests.

  4. Filing Requirements:

    • Deadline: Existing companies formed before January 1, 2024, must file their initial reports by January 1, 2025. Newly-formed companies created after January 1, 2024, must file within 90 days of notice of their creation or registration.
    • Filing Process: Companies must file electronically through the FinCEN BOI E-Filing System.
  5. Exemptions: Certain types of entities are exempt, such as public companies, certain regulated entities (banks, credit unions, etc.), and entities involved in private equity and venture capital, subject to specific criteria.

  6. Penalties for Non-Compliance: Willful violations can lead to civil penalties of up to $500 per day and criminal penalties including imprisonment and fines.

  7. FinCEN Identifier: A unique number issued by FinCEN to individuals, which can be used instead of providing personal information for each report.

Action Steps for Florida Business Owners:

  1. Determine Eligibility: Check if your business falls under the definition of a reporting company.

  2. Collect Required Information: Assemble the necessary company, beneficial owner, and company applicant information.

  3. File Reports: Use the FinCEN BOI E-Filing System for reporting. Companies can also engage third-party service providers for this.

  4. Update Information: Amend reports within 30 days to include updated information or correct inaccuracies.

  5. Stay Informed: Regularly check for updates from FinCEN and adjust compliance strategies accordingly.

  6. Seek Professional Advice: Consider consulting with legal or financial experts to ensure full compliance with the CTA.

This new rule is a significant regulatory change, and it is essential for business owners to understand their responsibilities under it to avoid penalties and ensure compliance

Please click your advisor below to send them an email regarding this topic.

Email Buttons

FinCEN Website

If you would like to read directly from FinCEN about this topic please click below.

FinCEN Website