BOI Reporting Companies Get More FinCEN Clarification

On 9/10/24, FinCEN updated its BOI FAQs page by adding four new FAQs that provide more clarity to BOI Reporting Companies. The new FAQ’s address the areas of companies that cease to exist, foreign companies that stop doing business in the U.S. and beneficial owners. The last FinCEN update to BOI FAQs was on 7/24/24.  FinCEN states that it will continue to provide guidance on how to submit beneficial ownership information and information via the FinCEN BOI FAQs web page. It is important to keep up and stay informed with the FinCEN BOI FAQs in order to stay compliant with FinCEN Beneficial Ownership Reporting requirements.

Here are the four extracts from the new FinCEN FAQs dated 9/10/24 that address BOI Reporting Companies:

14. 14. If a reporting company created or registered in 2024 or later winds up its affairs and ceases to exist before its initial BOI report is due to FinCEN, is the company still required to submit that initial report?

Yes. Reporting companies created or registered in 2024, no matter how quickly they cease to exist thereafter, must report their beneficial ownership information to FinCEN within 90 days of receiving actual or public notice of creation or registration. Reporting companies created or registered in 2025 or later, no matter how quickly they cease to exist thereafter, must report their beneficial ownership information to FinCEN within 30 days of receiving actual or public notice of creation or registration. These obligations remain applicable to reporting companies that cease to exist as legal entities—meaning wound up their affairs, ceased conducting business, and entirely completed the process of formally and irrevocably dissolving—before the expiration of the 30- or 90-day period reporting companies have to report their beneficial ownership information to FinCEN. If a reporting company files an initial beneficial ownership information report and then ceases to exist before the expiration of the 30- or 90-day period reporting companies have to report their beneficial ownership information to FinCEN, then there is no requirement for the reporting company to file an additional report with FinCEN noting that the company has ceased to exist.

15. 15. Who may file a BOI report on behalf of a reporting company created or registered in 2024 or later that ceases to exist before its initial BOI report is due to FinCEN?

Anyone whom a reporting company authorizes to act on its behalf—such as an employee, owner, or third-party service provider—may file a BOI report on the reporting company’s behalf, even after the reporting company ceases to exist. Thus, if a reporting company will cease to exist before the expiration of the 30- or 90-day period reporting companies have to report their beneficial ownership information to FinCEN, then it should make arrangements while it exists to have the report submitted on its behalf, even if the requisite filing does not occur until after the reporting company ceases to exist. Regardless, the BOI report must be filed by the time such report is due to FinCEN.

16. 16. Is a foreign company required to report its beneficial ownership information to FinCEN if the company stopped doing business in the United States before reporting requirements went into effect on January 1, 2024?

A foreign company is not required to report its beneficial ownership information to FinCEN if it ceased to be registered to do business in the United States before January 1, 2024. For purposes of complying with beneficial ownership information reporting requirements under the CTA, a foreign reporting company ceases to be registered to do business in the United States when it entirely completes the process of formally and irrevocably withdrawing its registration(s) to do business in the United States. A foreign company that entirely withdrew any and all registrations to do business in the United States before the beneficial ownership information reporting requirements became effective January 1, 2024, was never subject to the reporting requirements and thus is not required to report its beneficial ownership information to FinCEN.

Although state or Tribal law may vary, a foreign company typically completes the process of formally and irrevocably withdrawing its registration to do business in a jurisdiction by, for example, filing withdrawal paperwork with its jurisdiction of registration, receiving written confirmation of withdrawal, paying related taxes or fees, ceasing to conduct any business in the jurisdiction, and winding up its affairs in that jurisdiction.

If a foreign reporting company was registered to do business in the United States on or after January 1, 2024, for any period of time (i.e., the company did not entirely complete the process of withdrawing its registration before January 1, 2024), then it is required to report its beneficial ownership information to FinCEN, even if the company had wound up its affairs and ceased conducting business before January 1, 2024.

Similarly, if a foreign reporting company was registered to do business in the United States on or after January 1, 2024, for any period of time, and subsequently withdrew that registration, then the company is required to report its beneficial ownership information to FinCEN—even if it withdrew the registration before the expiration of the 30- or 90-day period reporting companies have to report their beneficial ownership information to FinCEN.

For specifics on how to determine when a company withdraws its registration to do business, consult the law of the jurisdiction in which the company was registered. A company that is administratively suspended from conducting business—because, for example, it failed to pay a filing fee or comply with certain jurisdictional requirements—generally does not cease to be registered to conduct business unless the suspension becomes permanent.

4. 4. Should an initial BOI report include historical beneficial owners of a reporting company, or only beneficial owners as of the time of filing?

Except as noted below, an initial BOI report should only include the beneficial owners as of the time of the filing. Reporting companies should notify FinCEN of changes to beneficial owners and related BOI through updated reports.

If a reporting company created or registered in 2024 or later ceases to exist before the expiration of the 30- or 90-day period reporting companies have to report their beneficial ownership information to FinCEN, but no one submits the reporting company’s initial beneficial ownership information report to FinCEN until after the reporting company ceases to exist, then that beneficial ownership information report should reflect the beneficial ownership information accurate as of the moment prior to the reporting company ceasing to exist.

BOI Reporting Companies need to comply with BOI reporting requirements to avoid penalties 

Do the FinCEN FAQs  dated 9/10/24 provide more clarity regarding your reporting requirements?

Do the FinCEN FAQs dated 9/10/24 demonstrate that you ought to consider working with a Corporate Governance advisor?

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