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Final Regulations Issued for Beneficial Ownership Information Reporting

October 4, 2022

FinCEN Publishes Final Rule on Beneficial Ownership Information Reporting Requirements

The Financial Crimes Enforcement Network (FinCEN) division of the Department of Treasury issued final regulations for beneficial ownership information (BOI) reporting. The new regulations are effective as of January 1, 2024.

In a previous article we discussed the Corporate Transparency Act and Treasury’s proposed regulations.  The final regulations largely adopt the proposed rules with some easing of dates for compliance and clarification of certain items. Importantly, all companies in existence as of January 1, 2024, that do not meet one of the exceptions from filing will be required to file an initial report on or before December 31, 2024.

Big Picture View of Beneficial Ownership Information Reporting Requirements

The following excerpts from the Background Information section of the Final Regulations provides a big picture view of BOI reporting:

The statutory requirement for reporting companies to submit BOI takes effect “on the effective date of the regulations” implementing the reporting obligations. The section provides that reporting companies created or registered to do business after the effective date will need to submit the requisite information to FinCEN at the time of creation or registration, while reporting companies in existence before the effective date will have a specified period in which to report. The CTA’s reporting requirements generally apply to smaller, more lightly regulated entities that are less likely to be subject to any other beneficial ownership information reporting requirements. By contrast, the CTA exempts certain categories of larger, more heavily regulated entities from its reporting requirements.

The statute prescribes the basic outline of reporting requirements. It requires reporting companies to submit to FinCEN, for each beneficial owner and each individual who files an application to form a domestic entity or register a foreign entity to do business (company applicant), four pieces of information— the individual’s full legal name, date of birth, current residential or business street address and a unique identifying number from an acceptable identification document (e.g., a passport)—or the individual’s FinCEN identifier.

A FinCEN identifier is a unique identifying number that FinCEN will issue to individuals or reporting companies upon request, subject to certain conditions. For individuals, FinCEN will issue a FinCEN identifier if an individual submits to FinCEN the same four pieces of identifying information as would be required in a BOI report.

Business entities created or established after the effective date of the regulations will have 30 days to file their initial BOI and applicant information with FinCEN. After the initial filing, all entities will have 30 days to report changes or corrections to their BOI reports. The proposed regulations had originally stated a 14-day window for filing in these situations. The final regulations do not include any mechanism for an extension of time to file the BOI reports. However, there is a safe harbor for companies to make corrections to a filed BOI report, if the corrections are made within 90 days of the date the report was filed.

Will FinCEN be Ready for BOI Reporting?

The Discussion of Final Rule section of the regulation answers, yes.

FinCEN is actively developing the database so that it will be ready to accept filings as of the effective date and intends to conduct outreach to communicate clearly the rules and expectations for reporting companies and other stakeholders reporting this information to FinCEN and FinCEN protecting and properly using the BOI data.

Companies subject to beneficial ownership information reporting should begin now to ready their policies and processes to collect and protect beneficial owner information. Data must be gathered and prepared for initial reporting by the end of 2024. Company policies and procedures should also incorporate a regular review of BOI information to make timely filings for updates and corrections.

Cherry Bekaert is Here to Help You Prepare for Beneficial Ownership Information Reporting

Cherry Bekaert’s International Tax Services practice is monitoring the development of the BOI database and FinCEN’s reporting mechanisms. We expect to see further regulations, draft forms, frequently asked questions and other communications over the next 24 months. We will provide further communications and help companies prepare for beneficial ownership information reporting. If you have questions or need assistance, please contact your tax advisor or Cherry Bekaert’s international tax professionals.

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