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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.
Reporting Companies: This includes certain U.S. legal entities and foreign entities registered to do business in the United States.
Beneficial Ownership Information (BOI) Reporting:
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.
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.
Penalties for Non-Compliance: Willful violations can lead to civil penalties of up to $500 per day and criminal penalties including imprisonment and fines.
FinCEN Identifier: A unique number issued by FinCEN to individuals, which can be used instead of providing personal information for each report.
Determine Eligibility: Check if your business falls under the definition of a reporting company.
Collect Required Information: Assemble the necessary company, beneficial owner, and company applicant information.
File Reports: Use the FinCEN BOI E-Filing System for reporting. Companies can also engage third-party service providers for this.
Update Information: Amend reports within 30 days to include updated information or correct inaccuracies.
Stay Informed: Regularly check for updates from FinCEN and adjust compliance strategies accordingly.
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
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