Beneficial Ownership Information Report – Yes, You Need To Do This Now (October 9, 2024)

October 9, 2024

To our Clients and Friends:

Beneficial Ownership Information Report – Yes, You Need To Do This Now.

Well, by December 31, 2024, to avoid a fine.

The Corporate Transparency Act (CTA) introduced the requirement for the Financial Crimes Enforcement Network (FinCEN), a branch of the U.S. Department of the Treasury, to collect beneficial ownership information (BOI) for new and existing business entities. This reporting requirement applies to corporations, limited liability companies, and other entities that fall within the CTA’s definition of a “reporting company.”

Beginning this past January 1, 2024, all newly formed reporting companies are required to report the required information to FinCEN within 30 days of their formation. Reporting companies already in existence as of December 31, 2023, have until January 1, 2025, to report the required information to FinCEN. Foreign companies doing business in the U.S. also have similar requirements.

Ignore for the moment any litigation you may have heard of relating to the CTA or the BOI rules and regulations, since you are required to file unless you are currently a party to any such litigation. And the failure to file the required BOI on time will subject you to civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Further, senior officers of an entity that fails to file a required BOI report may be held accountable for that failure.

So, assume you are a “reporting company,”[1] under the implementing rules, a “beneficial owner” is any “individual who, directly or indirectly, either exercises substantial control over such reporting company or owns or controls at least 25 percent of the ownership interests of such reporting company.” This includes of any company that is in the corporate chain of ownership, since the goal of the CTA and BOI is to gather information relating to the natural persons that own and control at least 25% of a reporting company.

Note that not only actual owners of a reporting company are required to provide information to FinCEN, but also anyone that exercises “substantial control” over such reporting company, in other words any individual, whether an equity holder or not, that has or can influence decision making at the reporting company.

The following information must be provided for each beneficial owner:

full legal name;
date of birth;
current residential or business street address; and
a unique identifying number from an acceptable identification document (e.g., driver’s license).

A reporting company is required to provide the following information:

full legal name of the reporting company;
all trade names, fictitious names, or doing business as (DBA) names, regardless of whether the name is registered;
street address of principal place of business;
jurisdiction of formation (state or tribal);
IRS taxpayer identification number (TIN); and
the name of the natural person (the “company applicant”) who (a) is directly responsible for filing on behalf of the reporting company; and (b) is primarily responsible for directing or controlling such filings if more than one individual is involved in the process.

Go here to file online: https://boiefiling.fincen.gov. If you think you will be filing for a beneficial owner or a reporting company multiple times due to multiple holdings, you can go here to file for a unique identification number to use in future filings: https://fincenid.fincen.gov/landing.

Although the US Treasury Department has created a BOI home page (https://fincen.gov/boi), which can guide you through the process, we are available to address any questions you may have as to the more nuanced requirements of the filing process and related required information.

For further information or any questions on this issue, please contact Marvin Miller (miller@cmxlaw.com), Head of CMXLaw’s Finance and Banking Practice Group.

Crath Miller & Xistris LLP

For further information, please contact us at info@cmxlaw.com.

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[1] There are 23 types of corporate entities exempt from the deﬁnition of reporting company, including publicly reporting companies, banks, credit unions, depository institution holding companies, broker-dealers, clearing agencies, investment companies, investment advisers and other Exchange Act registered entities, and pooled investment vehicles.