FAQs

FinCEN, the Financial Crimes Enforcement Network, has announced that they will not accept BOI (Beneficial Ownership Information) reports from reporting companies until January 1st, 2024. This means that reporting companies should refrain from submitting any BOI reports to FinCEN before that specified date. It’s essential for reporting entities to ensure they comply with this timeline to avoid any potential regulatory issues or penalties. Furthermore, companies should stay updated on any additional guidelines or requirements that FinCEN may provide leading up to the 2024 reporting commencement date to ensure a smooth transition.

FinCEN has extended the deadline for certain reporting companies filing their initial Beneficial Ownership Information (BOI) reports. Reporting companies created or registered in 2024 now have a 90-day window, starting from the date they receive notice of their creation or registration becoming effective, to submit their initial BOI reports. This extension provides these companies with additional time to familiarize themselves with FinCEN’s guidance and educational resources, as well as address any questions that may arise during the reporting process. For reporting companies established before January 1st, 2024, the deadline to file their initial BOI reports with FinCEN is January 1st, 2025. In contrast, reporting companies created or registered on or after January 1st, 2025, will have a 30-day period to submit their initial BOI reports after receiving notice of their creation or registration becoming effective. These extensions aim to facilitate compliance with FinCEN’s requirements while accommodating different timelines for reporting entities.

Under the Corporate Transparency Act (CTA) guidelines, a beneficial owner is an individual who directly or indirectly has substantial control over or owns 25% or more of the ownership interests in a reporting company. This definition encompasses individuals who exert significant influence or authority over the company, even if they don’t hold formal titles or direct ownership stakes. The CTA’s objective is to identify those who might attempt to conceal their ownership interests within complex corporate structures, enhancing transparency and accountability in corporate ownership. Properly identifying and reporting beneficial owners is a key component of CTA compliance and serves to promote transparency in corporate structures.

Under the Corporate Transparency Act (CTA), 23 types of entities are exempt from the beneficial ownership information reporting requirements. These exemptions encompass various categories, including publicly traded companies that meet specific criteria, certain nonprofit organizations, and specific large operating companies. Here’s a summary of the 23 exemptions:

• Securities Reporting Issuer
• Governmental Authority
• Bank
• Credit Union
• Depository Institution Holding Company
• Money Services Business
• Broker Or Dealer In Securities
• Securities Exchange Or Clearing Agency
• Other Exchange Act Registered Entity
• Investment Company Or Investment Adviser
• Venture Capital Fund Adviser
• Insurance Company
• State-Licensed Insurance Producer
• Commodity Exchange Act Registered Entity
• Accounting Firm
• Public Utility
• Financial Market Utility
• Pooled Investment Vehicle
• Tax-Exempt Entity
• Entity Assisting A Tax-Exempt Entity
• Large Operating Company
• Subsidiary Of Certain Exempt Entities
• Inactive Entity

These exemptions cover a wide range of entities and aim to streamline reporting requirements while still promoting transparency and accountability in corporate structures. It’s important to note that the specific criteria for these exemptions may vary, and it’s advisable to consult the official CTA guidelines or seek legal counsel to determine if your company qualifies for any of these exemptions.

Substantial control and ownership interest, within the context of a reporting company under the Corporate Transparency Act (CTA), refer to important concepts used to identify individuals who qualify as beneficial owners. Here’s an explanation of these terms:

In essence, substantial control and ownership interest are fundamental criteria used to determine who qualifies as a beneficial owner of a reporting company under CTA guidelines. Identifying and accurately reporting these individuals is crucial for ensuring transparency and accountability in corporate ownership structures.

Whether your accountant or lawyer is considered a beneficial owner or company applicant under the Corporate Transparency Act (CTA) depends on the specific nature of the work they perform and their role within the reporting company. Accountants and lawyers who provide general accounting or legal services, typically in an arms-length, advisory capacity, are generally not classified as beneficial owners. The CTA does not consider these ordinary professional services as constituting “substantial control.”

However, there are exceptions to this rule. An individual who holds the position of general counsel within a reporting company is considered a “senior officer” of that company and, therefore, qualifies as a beneficial owner. Furthermore, if a lawyer or accountant is designated as an agent of the reporting company, they may qualify for the “nominee, intermediary, custodian, or agent” exception from the beneficial owner definition.

Not all reporting companies are obligated to report their company applicants to FinCEN. The requirement to report company applicants depends on the following criteria:

Reporting Companies That Must Report Company Applicants:

• Domestic reporting companies created in the United States on or after January 1, 2024.
• Foreign reporting companies first registered to do business in the United States on or after January 1, 2024.

Reporting Companies That Are Not Required to Report Company Applicants:

• Domestic reporting companies created in the United States before January 1, 2024.
• Foreign reporting companies first registered to do business in the United States before January 1, 2024.

It’s essential for reporting companies to determine their creation or registration dates and their status as domestic or foreign entities to ascertain whether they have an obligation to report their company applicants to FinCEN based on these specific criteria.

If your company needs to make changes, to a report, you will have 30 days to do so. For updates, the 30-day period begins when the relevant change happens. For corrections, the 30-day timeframe starts after you become aware of, or have reason to know about, an inaccuracy in a previous report. It’s crucial to follow the correct procedures to ensure accuracy and compliance. Here are the general steps you should take:

• Identify the Updates: Determine the specific information that needs to be updated in your BOI report. This could include changes in beneficial ownership, ownership percentages, or other relevant details.
• Prepare the Revised Report: Create a revised BOI report with the updated information. Ensure that all changes are accurately documented and that the report reflects the current state of your company’s beneficial ownership.
• Submit the Updated Report: Follow the submission procedures outlined by the regulatory authorities, typically the Financial Crimes Enforcement Network (FinCEN). You may need to submit the updated report through the appropriate channels, which may include online filing systems or other designated methods.
• Retain Records: Keep records of both the original and updated BOI reports for your company’s records. Documentation is essential for demonstrating compliance with reporting requirements.
• Seek Legal Guidance: If you have any questions or uncertainties about the process of updating your BOI report, it’s advisable to consult with legal professionals or regulatory authorities to ensure you follow the correct procedures.

Remember that maintaining accurate and up-to-date BOI reports is essential to compliance with the Corporate Transparency Act (CTA) and can help your company avoid potential penalties for non-compliance.

If you discover an inaccuracy in your Beneficial Ownership Information (BOI) report, it’s essential to take prompt corrective action to ensure compliance with the Corporate Transparency Act (CTA). You will only have a 30-day window to make corrections once you become aware of the error. Here’s what you should do:

• Review the Inaccuracy: Carefully examine the BOI report to identify the specific inaccuracies and their nature. Determine whether they pertain to beneficial ownership details, ownership percentages, or any other relevant information.
• Prepare Corrected Information: Gather accurate and updated information to rectify the inaccuracies in the report. Ensure that the corrected information aligns with the current state of your company’s beneficial ownership.
• Submit Corrected Report: Prepare and submit a corrected BOI report to the relevant regulatory authority, typically the Financial Crimes Enforcement Network (FinCEN). Follow the specified procedures for reporting updates or corrections, which may involve online filing systems or other designated methods.
• Document Corrections: Maintain records of both the original report and the corrected report to demonstrate your company’s commitment to accuracy and compliance with CTA requirements.
• Seek Legal Counsel: If you encounter challenges in rectifying inaccuracies or have concerns about potential implications, consider consulting with legal professionals experienced in corporate compliance and CTA regulations.

It’s crucial to address inaccuracies promptly to ensure that your BOI report reflects the most accurate and up-to-date information regarding your company’s beneficial ownership. Failure to correct inaccuracies could result in non-compliance with CTA regulations, potentially leading to penalties or legal consequences.

Under the Corporate Transparency Act (CTA), FinCEN can disclose your beneficial ownership information to federal agencies, law enforcement, state agencies, financial institutions, and regulated entities for security, law enforcement, and regulatory purposes, with privacy safeguards in place. This information is not typically made public.

Under the Corporate Transparency Act (CTA), entities are categorized as either “pre-effective” or “post-effective” based on their formation or registration dates:

• Pre-Effective Entities: These are entities that were formed or registered before the CTA’s effective date, which was January 1, 2021. Pre-effective entities have a two-year window, until January 1, 2023, to submit their initial Beneficial Ownership Information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN).
• Post-Effective Entities: Post-effective entities are those that are created or registered on or after the CTA’s effective date, which is January 1, 2021. For post-effective entities, the requirement to submit BOI reports applies at the time of their formation or registration with the relevant state authority.

This classification helps determine when a reporting entity must comply with BOI reporting requirements, with pre-effective entities having a specific timeframe for initial reporting and post-effective entities needing to report as part of their formation or registration process. Accurate classification is essential for CTA compliance.

The distinction between a beneficial owner and a company applicant lies in their roles and responsibilities within a reporting company under the Corporate Transparency Act (CTA):

Beneficial Owner:

• Role: A beneficial owner is an individual who directly or indirectly owns at least 25% of the ownership interests in a reporting company or exercises substantial control over it.
• Responsibility: Beneficial owners are subject to disclosure requirements and must be identified and reported to the Financial Crimes Enforcement Network (FinCEN) as part of the Beneficial Ownership Information (BOI) reporting process. They are typically associated with ownership and control of the company.

Company Applicant:

• Role: A company applicant is an individual who plays a significant role in initiating the formation or registration of a reporting company. They are involved in the process of creating or registering the legal entity.
• Responsibility: Company applicants have reporting obligations under the CTA. They are required to provide their information to FinCEN when they are involved in the formation or registration of a reporting company. Company applicants are connected to the process of creating the entity.

In summary, while both beneficial owners and company applicants have reporting obligations under the CTA, their roles within the reporting company differ. Beneficial owners are primarily associated with ownership and control, while company applicants are linked to the process of forming or registering the entity. Accurate identification and reporting of both are essential for CTA compliance.