Attention Business Owners: FinCEN Reporting Requirements
March 25, 2024 | Member Submitted
Submitted 3/25/2024, Written by Jeremy Krenek, Lakeside Lawyers
If you own a business (corporations, LLCs, etc.) you are now subject to new reporting requirements or you could be subject to substantial monetary fines and/or jail time.
The Financial Crimes Enforcement Network (“FinCEN”), a bureau of the United States Department of Treasury, exchanges information with foreign financial intelligence units around the world in support of U.S. and foreign financial crime investigations. Put simply, they investigate and prosecute money launderers. You may be familiar with the form that you have to fill out at the bank if you deposit more than Ten Thousand Dollars ($10,000) cash at a time. FinCEN has now implemented a new Reporting Rule for companies which became effective January 1, 2024.
The Reporting Rule requires certain entities to file beneficial ownership information (“BOI”) reports to FinCEN. Reports contain information about the entity itself and two categories of individuals: (1) beneficial owners; and (2) company applicants. A beneficial owner is an individual who controls at least Twenty-Five Percent (25%) of a company or has substantial control over the company. A company applicant is an individual who directly files or is primarily responsible for the filing of the document that creates or registers the company.
Starting on January 1, 2024, BOI reports must be filed electronically using FinCEN’s secure filing system. According to FinCEN, “FinCEN will store BOI reports in a centralized database and only share this information with authorized users for purposes specified by law. The database will use rigorous information security methods and controls typically used in the Federal government to protect non-classified yet sensitive information systems at the highest security level.”
Deadline to File
Reporting companies created or registered to do business before January 1, 2024, will have until January 1, 2025, to file their initial BOI reports.
Reporting companies created or registered on or after January 1, 2024, and before January 1, 2025, have 90 calendar days after receiving actual or public notice that their company’s creation or registration is effective to file their initial BOI reports. Specifically, this 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office provides public notice of its creation or registration, whichever is earlier.
Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports.
1 An individual exercises substantial control over a reporting company if the individual meets any of the following criteria: (1) the individual is a senior officer; (2) the individual has authority to appoint or remove certain officers or a majority of directors of the reporting company; (3) the individual is an important decision-maker; or (4) the individual has any other form of substantial control over the reporting company.
2 A reporting company is not required to report its company applicants if it is a domestic company reporting a company created before January 1, 2024.