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

On September 29, 2023, FinCEN updated the FAQs regarding Beneficial Ownership Information (BOI) Reporting, including guidance on the FinCEN identifier.   The FinCEN’s BOI FAQs work in tandem with the FinCEN’s BOI Small Business Guide that was released on 9/18/23 to assist the small business community in complying with BOI reporting rule that starts January 1, 2024.

The FinCEN identifier is a unique identifying number that FinCEN will issue to an individual or reporting company upon request after the individual or reporting company provides certain information to FinCEN.  Although FinCEN states that an individual or reporting company is not required to obtain an identifier, individuals or reporting companies may find the FinCEN identifier useful as it could provide “administrative relief” and “less risk”.  Meaning, the identifier can be used instead if having to submit personal identifying information each time a report needs to be issued.

When FinCEN published the BOI Small Business guide it stated that the use of FinCEN identifiers obtained by reporting companies was the subject of ongoing rulemaking and that it anticipated providing additional guidance when that rulemaking was finalized. That said, on 11/08/2023, FinCEN issued a Final Rule with respect to the use of FinCEN Identifiers for Reporting Beneficial Ownership Information of Entities.

FinCEN states in the Final Rule published on 11/8/23 that the changes incorporated will improve the clarity of the provision and make it more likely that reporting companies will use the FinCEN identifier as intended:  “The final rule incorporates changes to clarify the circumstances in which an entity FinCEN identifier could be used. These changes, which were specifically suggested by commenters, are: (1) to consistently refer to the entity whose FinCEN identifier the reporting company may use as “another entity” or “the other entity” rather than simply “the entity,” in order to avoid confusion with the reporting company itself; and (2) to make clear that it is an individual’s ownership interest in another entity that allows the reporting company to report the other entity’s FinCEN identifier in lieu of the individual’s information”.

Here is what know about the FinCEN identifier:

  • An individual or reporting company may only receive one identifier.
  • A company may include FinCEN identifiers in its BOI report instead of certain required information about beneficial owners or company applicants.
  • Individuals may electronically apply for FinCEN identifiers. In the application, an individual must provide their name, date of birth, address, unique identifying number and issuing jurisdiction from an acceptable identification document, and an image of the identification document – the same four pieces of personal information and image reporting companies submit about beneficial owners and company applicants in BOI reports.
  • After an individual submits an application, the individual will immediately receive a FinCEN identifier unique to that individual.
  • Once a beneficial owner or company applicant has obtained an identifier, reporting companies may report it in place of the otherwise required four pieces of personal information about the individual in BOI reports.
  • A company may request an identifier when it submits a BOI report by checking a box on the reporting form.
  • When the information an individual or reporting company reported to FinCEN to obtain a FinCEN identifier changes, or when the individual or reporting company discovers that reported information is inaccurate, the individual or reporting company must update or correct the reported information, as applicable.
  • Individuals will be able to request a FinCEN identifier on or after January 1, 2024, by completing an electronic web form. Individuals will need to provide their full legal name, date of birth, address, unique identifying number and issuing jurisdiction from an acceptable identification document, and an image of the identification document. After an individual submits this information, the individual will immediately receive a FinCEN identifier unique to that individual.
  • Reporting companies may request a FinCEN identifier by checking a box on the beneficial ownership information report when they submit the report. After the reporting company submits the report, the reporting company will immediately receive a FinCEN identifier unique to that company. If a reporting company wishes to request a FinCEN identifier after submitting its initial beneficial ownership report, it may submit an updated beneficial ownership information report requesting an identifier, even if the company does not otherwise need to update its information.
  • Individuals must update or correct information through the FinCEN identifier application that is also used to request a FinCEN identifier.
  • Individuals must report any change to the information they submitted to obtain a FinCEN identifier no later than 30 days after the date on which the change occurred.
  • If there is any inaccuracy in this information, an individual must correct the information no later than 30 days after the date the individual became aware of the inaccuracy or had reason to know of it.
  • Reporting companies with a FinCEN identifier must update or correct the company’s information by filing an updated or corrected beneficial ownership information report, as appropriate.
  • As per the Final Rule published on 11/8/23, a reporting company may report another entity’s FinCEN identifier and full legal name in lieu of the information required with respect to the beneficial owners of the reporting company only if: 1) the other entity has obtained a FinCEN identifier and provided that FinCEN identifier to the reporting company; 2) 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; and 3) the beneficial owners of the other entity and of the reporting company are the same individuals.
  • FinCEN is actively assessing options to allow individuals to deactivate a FinCEN identifier so that they do not need to update the underlying personal information on an ongoing basis. FinCEN will provide additional guidance on this functionality upon completion of that process.

 Third-Party Service Providers. On 9/29/23, an FAQ addressing Third-Party Service Providers was also released as noted below:

Question N. 1. of the FAQs:  Can a third-party service provider assist reporting companies by submitting required information to FinCEN on their behalf?

Answer:  Yes. Reporting companies may use third-party service providers to submit beneficial ownership information reports. Third-party service providers will have the ability to submit the reports via FinCEN’s E-Filing system and/or an Application Programming Interface (API). Technical specifications for the API will be made available at a later date.

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.

Will you need a Third-Party Service Provider to submit BOI reports?

Will you be ready for the BOI Reporting Rule?

Who is your Corporate Governance Expert?  ©