The Financial Crimes Enforcement Network (FinCEN) released a Final Rule regarding beneficial owner information (BOI) reporting. The Final Rule addresses the circumstance when a reporting company can use a FinCEN entity identifier of a related entity when completing its BOI report.
Why Is There BOI Reporting?
The Corporate Transparency Act (CTA) was passed into law as part of the National Defense Authorization Act for fiscal year 2021. CTA requires many businesses to report to the Department of the Treasury (Treasury) certain identifying information about the individuals who own or control such businesses and the individuals who form or register these businesses. FinCEN issued its BOI Reporting Requirements Rule in September of 2022. The BOI reporting requirements are effective beginning January 1, 2024.
What Are the BOI Reporting Rules?
The BOI rule requires reporting companies to report to FinCEN within prescribed time periods information about themselves, as well as information about individuals who are beneficial owners of the reporting company. To ease the compliance burden, FinCEN will issue a unique identifying number to individuals who provide FinCEN with their BOI. To simplify compliance, FinCEN will assign a unique identifying number to individuals and companies submitting their BOI information.
When to Report?
Reporting companies may use the FinCEN individual identifier in accordance with the Final Rule issued in 2022 in lieu of reporting the required information for each beneficial owner. Under a Final Rule issued on November 7, 2023, reporting companies and related entities may report a FinCEN entity identifier when these three conditions are satisfied:
- The other entity has obtained a FinCEN entity identifier and provided that identifier to the reporting company.
- An individual is or may be a beneficial owner of the reporting company by virtue of an interest in the reporting company that the individual holds through an ownership interest in the other entity.
- The beneficial owner(s) of the other entity and the reporting company are the same individuals.
What Is to Come in 2024?
Beginning January 1, 2024, millions of companies in the United States will begin to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Treasury. Cherry Bekaert does not provide consulting or compliance services to individuals or businesses in connection with the new Beneficial Owner Information (BOI) reporting. We encourage you to familiarize yourself with the reporting requirements of the Corporate Transparency Act (CTA) and meet with your attorney to discuss whether the new law impacts you.
More information may be found at Small Business Resources | FinCEN.gov
