October 2023 Foodman Website and JD Supra
FinCEN Guide FinCEN Guía Identificador FinCEN

On September 18, 2023, the FinCEN BOI Small Business Guide was released to assist the small business community in complying with the beneficial ownership information (BOI) reporting rule that starts January 1, 2024.  The purpose of the FinCEN 56-page BOI Guide is to help small businesses understand the description of each of the BOI reporting rule’s provisions in simple, easy-to-read language; answers key questions; and provides interactive checklists, infographics, and other tools to assist in complying with the BOI reporting rule.  The FinCEN BOI Guide has 6 chapters plus an Appendix  – which is basically an index. The 6 chapters contain key questions and answers that are designed to help the businesses comply with the Reporting Rule.

Reporting Rule

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:

  • Beneficial owners
  • Company applicants

The FinCEN BOI Guide has six key questions (6 chapters) to help businesses comply with the Reporting Rule:

  1. Does my Company have to report its beneficial owners?

Under the Reporting Rule, not all companies are required to report BOI to FinCEN. Companies are required to report only if they meet the Reporting Rule’s definition of a “reporting company” and do not qualify for an exemption.  Chapter 1  covers the definition of reporting company, describes entities that are exempt, and explains what happens if the required information is not reported.  Key questions and answers are: Is my company a “reporting company”? Is my company exempt from the reporting requirements? What happens if my company does not report BOI in the required timeframe?

  1. Who is a beneficial owner of my company?

If a company is a reporting company, the next step is to identify its beneficial owners. A beneficial owner is any individual who, directly or indirectly: Exercises substantial control over a reporting company OR  Owns or controls at least 25 percent of the ownership interests of a reporting company. Answers to:   What is substantial control? What is an ownership interest? What steps can I take to identify my company’s beneficial owners? Who qualifies for an exception from the beneficial owner definition? are found in this chapter.

  1. Does my company have to report its company applicants?

Only certain reporting companies must include information about their company applicants in their BOI reports.  In order to determine whether the requirements apply to a business, the FinCEN BOI Guide provides answers to the following questions:  Is my company required to report its company applicants? Who is a company applicant of my company?

  1. What specific information does my company need to report?

BOI reports require specific pieces of information about your company, its beneficial owners, and its company applicants.  This chapter covers what information needs to be provided to obtain a FinCEN identifier.  The person submitting information to FinCEN must certify that it is true, correct, and complete.  This chapter answers the following questions: What information should I collect about my company, its beneficial owners, and its company applicants? What do I report if a special reporting rule applies to my company? What is a FinCEN identifier and how can I use it?

  1. When and how should my company file its initial report?

The Reporting Rule is effective on January 1, 2024.  FinCEN will begin accepting BOI reports electronically through its secure filing system on this date.  BOI reports will not be accepted prior to January 1, 2024.  This chapter explains when a company should file its initial BOI report and how to do so by providing answers to questions:  When should my company file its initial BOI report? How does my company file a BOI report?

  1. What if there are changes to or inaccuracies in reported information?

Reporting companies must file an initial BOI report as well as update and correct information in their previously filed BOI reports.  Individuals who obtain FinCEN identifiers must also update, and correct information previously reported to FinCEN.  When there are changes to or inaccuracies in reported, this chapter provides answers to the following questions: What should I do if previously reported information changes? What should I do if I learn of an inaccuracy in a report? What should my company do if it becomes exempt after already filing a report?

Reporting companies (domestic and foreign) ought to make sure that they will be ready to comply with the FinCEN BOI reporting rule by its effective date of January 1, 2024, to identify the beneficial owners of an entity and the company applicants of an entity

The FinCEN BOI reporting rule is designed to protect the US financial system from illicit use and impede malign actors from abusing legal entities, including shell companies, to conceal proceeds of corrupt/criminal acts.  Moreover, the Rule brings the U.S. into coordination with international AML/CFT standards, sets a clear federal standard for incorporation practices, protects vital U.S. national security interests, protects interstate and foreign commerce, and enables critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activities.

Will you be ready for the FinCEN BOI Reporting Rule?

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