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FinCEN Identifiers can make sharing data less cumbersome and helpful to Owners and Applicants

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Defining a FinCEN Identifier

A FinCEN Identifier (FinCEN ID) is a unique identifying number issued to reporting companies , beneficial owners, and company applicants by the Financial Crimes Enforcement Network (FinCEN). This identifier was introduced in response to the Corporate Transparency Act, a federal law that will become effective on January 1, 2024. The primary purpose of a FinCEN ID is to streamline the process of updating or filing a Beneficial Owner Information Report (BOIR).

Why Get a FinCEN Identifier as an Individual?

Obtaining a FinCEN Identifier is voluntary, but it can offer several advantages:

1. Data Security:
   One primary reason individuals seek a FinCEN ID is for enhanced data security. If you are a beneficial owner or company applicant, you may be concerned about sharing your personal data with multiple people. With a FinCEN ID, you can submit your information directly to FinCEN, bypassing the need for every company you are a beneficial owner for to have this sensitive information. This added layer of privacy can be appealing, especially for those who value confidentiality.
2. Efficiency:
   Another significant advantage of having a FinCEN Identifier is administrative efficiency. Many individuals are associated with multiple companies, or they may act as company applicants for numerous reporting companies. Rather than repeatedly gathering and submitting the same personal information, a FinCEN ID simplifies the process. With this identifier, you can use the same number for all the companies you are involved with, and only submit your personal identifying information once to FinCEN – saving you time and effort.

How to Obtain a FinCEN Identifier

To obtain a FinCEN Identifier, individuals must submit an application to FinCEN electronically. The application process is relatively straightforward, but it requires the submission of specific information, including:

• Your legal name
• Date of birth
• Current residential address
• A unique identifying number from a non-expired qualifying document, such as a state-issued driver’s license or passport
• An image of the identifying document

Additionally, applicants must certify that the information provided is accurate and complete. The application is expected to be available through login.gov, and FinCEN estimates that it will take approximately 20 minutes to complete.

Reporting companies may also obtain a FinCEN Identifier, but they will choose to do so on their initial BOIR. Under the Reporting Company section of the form there will be a field where you can elect to get an ID immediately following the filing of the first report. The company would then benefit from entering this number in order for FinCEN to link to their previously filed report when filing any updates, corrections, or getting reported on other BOIRs.

Are You Prepared to File?

In summary, a FinCEN Identifier is a unique identifying number issued by FinCEN to streamline the process of filing a Beneficial Owner Information Report. While it is not mandatory, obtaining a FinCEN ID can enhance data security and administrative efficiency. Whether you seek to protect your personal information or save time when dealing with multiple companies, a FinCEN Identifier can be a valuable tool in navigating the complex world of financial regulations.

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The Corporate Transparency Act is a critical, complex compliance ruling. Are you prepared?

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Introduction

In an era of increasing scrutiny of complex and anonymous ownership structures and an increasing focus on financial transparency, the Corporate Transparency Act (CTA) stands out as a crucial piece of legislation in the United States. So, what is the Corporate Transparency Act?

Most significantly, the CTA created new Beneficial Ownership Information Reporting (BOIR) which requires most legal entities to report information about formation, beneficial ownership, and control persons, with such reporting to begin January 1, 2024.

What is the Corporate Transparency Act?

Signed into law on January 1, 2021, the Corporate Transparency Act as a part of the National Defense Authorization Act represents a vital step in the fight against financial crime, money laundering, and illicit financial activities. The primary goal of the CTA is to enhance corporate transparency by requiring certain entities to disclose information about their beneficial owners to the federal government, specifically to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. FinCEN will utilize this data to establish and uphold a national registry, granting authorized users, including law enforcement agencies and certain financial institutions, access to the identities of individuals who possess direct or indirect ownership or control over a company.

Corporate Transparency Act: Key Provisions

Beneficial Ownership Disclosure

The Corporate Transparency Act mandates that corporations, limited liability companies (LLCs), and certain other types of legal entities (domestic and foreign) report detailed information about their beneficial owners, defined as individuals who directly or indirectly control 25% or more of the entity’s ownership interests or have substantial ability to control business decisions.

Company Applicant Disclosure

Each company that is required to file a Beneficial Ownership Information Report (BOIR) and was established in 2024 or later will need to report the individuals who i) directly submitted the document responsible for establishing or initially registering the reporting company and/or (ii) were chiefly accountable for guiding or managing the submission of the legal document. No more than two company applicants are to be reported.

Update Requirements

Entities covered by the Corporate Transparency Act must provide information such as the names, addresses, birthdates, unique identification numbers (e.g., driver’s license or passport numbers), and images of identification documents of their beneficial owners and control persons. Whenever any of this information changes, the entity has 30 days to submit the new information to FinCEN.

Enhanced Enforcement

The CTA imposes substantial penalties for non-compliance  and willful provision of false information. Entities that fail to report accurate beneficial ownership information may face significant criminal and civil penalties.

Regulatory Guidance

Subsequent to enactment of the Corporate Transparency Act, FinCEN has issued a series of interpretive regulations to establish the specifics of how the beneficial ownership reporting regime will be administered, and how key provisions will be interpreted. Such regulatory interpretation has included interpretation and guidance on what entities are subject to reporting, what beneficial owners and control persons must be reported, and what data fields and documentation will be required.

Non-Compliance

Failing to comply with the requirements can be very severe. It can be up to $10,000 in fines or up to 2 years of imprisonment. 

Are You Prepared to File?

The Corporate Transparency Act represents a significant milestone in the effort to enhance corporate transparency and combat financial crime in the United States. Understanding this new Act and its components is essential for all businesses and their advisors, so as to maintain compliance with this important legislation. Get educated about this topic, and make sure you have a game plan for your reporting requirements in 2024!

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From imprisonment for up to 2 years, or 10K in fines, the BOI penalties are steep.

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FinCEN BOI Penalties

The Beneficial Ownership Information Report (BOIR) is a critical component of the U.S. government’s efforts to enhance corporate transparency and combat financial crime. Failure to file a BOI report, or filing it late, can have significant consequences for businesses and their beneficial owners. In this article, we will explore what happens if you fail to file a BOI report, or if you file it after the deadline, emphasizing the importance of timely compliance.

Filing Requirement

The requirement to disclose beneficial ownership of most legal entities was created under the Corporate Transparency Act (CTA), which was signed into law on January 1, 2021. The Beneficial Ownership Information (BOI) rules contained in this legislation requires certain domestic and foreign entities to report information about their beneficial owners (Related: SecureCompliance.us | Corporate Transparency Act: What is Required for FinCEN?) to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Entities established January 1, 2024, and beyond will also have to report the individuals involved in the filing of formation documents (Company Applicants) (Related: Fincen.gov | Beneficial Ownership Information Reporting Rule Fact Sheet ).

Failure to File a Beneficial Ownership Information Report

Entities that do not file a BOIR may face fines of up to $500 per day for each day the report is not submitted. Additionally, criminal penalties may include fines of up to $10,000 and imprisonment for up to two years. While FinCEN has indicated that they may waive penalties in certain cases for mistakes or omissions that are corrected within 90 days of the deadline for the original report filing, it is uncertain at this point how aggressively BOI penalties will be assessed for late reports, missed deadlines, or incorrect information disclosures.

Avoiding Non-Compliance

To avoid the consequences of not filing a BOIR or filing late, entities should consider these 5 steps:

1. Determine whether your entity is subject to the BOI rule’s reporting requirements.
2. Stay informed of regulatory changes and deadlines related to the BOIR.
3. Ensure that beneficial ownership information is accurate and kept up to date.
4. Submit the BOIR within the specified timeframe.
5. If you are unsure about your compliance requirements, we recommend seeking legal counsel or guidance from regulatory authorities.

Are You Prepared to File?

The consequences for failure to comply with BOIR filing requirements are serious and should not be taken lightly. Businesses and individuals must recognize the legal, financial, and reputational risks associated with non-compliance. To avoid FinCEN BOI penalties, entities should prioritize timely and accurate reporting, staying informed about regulatory obligations, and seeking professional guidance when needed.

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FinCEN Announces Proposal for 90-day Extension of BOIR Filing Deadline

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Breaking News – Introduction

In a recent notice from the Federal Register, dated September 28, 2023, the Financial Crimes Enforcement Network (FinCEN) has proposed amendments to the Beneficial Ownership Information (BOI) reporting rule, potentially impacting entities created or registered in 2024. This proposal seeks to extend the filing deadline for certain BOI Reports (BOIR), providing entities with additional time to comprehend and comply with their new regulatory obligations.

90 Days to File a BOI Report?

FinCEN has proposed to amend the BOI reporting rule, which currently mandates entities created or registered on or after the rule’s effective date of January 1, 2024, to file initial BOIR’s with FinCEN within 30 days of notice of their creation or registration. The proposed amendment aims to extend that filing deadline from 30 days to 90 days for entities created or registered on or after January 1, 2024, and before January 1, 2025.

The proposed extension to 90 days would apply to both domestic and foreign entities created or registered in the United States in the first year after the Reporting Rule becomes effective. However, entities created or registered on or after January 1, 2025, would adhere to the original 30-day filing requirement.

In summary:

• Proposed 90 day filing period for entities formed on 2024 Calendar year
• From January 1, 2025, the original 30-day filing requirement will resume

Purpose of Extension

The extension is intended to grant newly formed reporting companies extra time to understand and adhere to their regulatory duties under the Reporting Rule. This additional time is expected to facilitate these newly established or registered entities through various facets of the Reporting Rule, including determining whether the new legal entity is defined as a “reporting company” or is eligible for an exemption, applying the definition of “beneficial owner” under the rule, and understanding other terms and requirements.

FinCEN believes that extending the time period in the first year is appropriate due to the novelty of the beneficial ownership reporting regime created by Congress under the Corporate Transparency Act (CTA)

Stay Informed

With the strict requirements, penalties and change surrounding this requirement, are you prepared to file your BOIR?

Get informed:

• Do Reporting Companies Need to File a BOI Report?
• Are You Exempt From FinCEN’s 2024 BOI Reporting Requirement?
• FinCEN Beneficial Ownership Reporting Demands Coming in 2024: Are You Prepared?

Secure Compliance is here as your expert guide. Follow us here and on LinkedIn for insights and news updates.

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Prepare your entity for new reporting requirements January 1, 2024.

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Introduction

As part of ongoing efforts to enhance transparency and combat financial crimes, the Corporate Transparency Act (CTA) created new beneficial ownership reporting requirements that will come into effect in 2024. These new reporting requirements will be administered by Financial Crimes Enforcement Network (FinCEN) and aim to shed light on the individuals who exercise substantial control over reporting companies or own significant ownership interests. However, it’s important to note that there are certain entities that are exempt from these reporting obligations. In this article, we will present a brief overview of BOI reporting exemptions from that are currently provided.

Background

Before assessing if your entity is exempt from reporting, you first need to understand if the entity is subject generally to the reporting requirements. Specifically if your entity is domestic, the entity may be a domestic reporting company if it was created by the filing of a document with a secretary of state or similar office of a jurisdiction within the United States. A foreign reporting company would be any entity created under the law of a foreign jurisdiction that is registered to do business in the United States.

By way of example, essentially all corporations and limited liability companies are subject to the reporting requirements generally, but a trust that is formed by a trust agreement that is not filed with a secretary of state may potentially not be subject to reporting.

Understanding BOI Reporting Exemptions

If you have determined that you are dealing with a domestic or foreign reporting company, the Corporate Transparency Act provides exemptions for 23 types of entities from the beneficial ownership information reporting requirement. These exemptions are designed to avoid duplicative reporting and account for entities that are already regulated by federal and/or state governments. These exemptions include:

1. Securities Reporting Issuers

   Securities issuer registered under the Securities Exchange Act of 1934, or required to file supplementary and periodic reporting requirements under the Act.

2. U.S. Governmental Authorities

   Entities that are established under the laws of the U.S., an Indian tribe, a State, or a political subdivision of a State, or under an interstate compact between two or more States, and they exercise authority on behalf of the U.S. or an Indian tribe, State, or political subdivision.

3. Banks

   Banks are defined in Sec. 3 the Federal Deposit Insurance Act, Sec. 2(a) the Investment Company Act of 1940, or Sec. 202(a) of the Investment Advisor’s Act of 1940.

4. Credit Unions

   Any Federal or State credit union defined in Sec. 101 of the Federal Credit Union Act.

5. Depository Institution Holding

   Any bank holding company defined in Sec. 2 of the Bank Holding Company Act of 1956. Also, any savings and loan holding companies defined in Sec. 10(a) of the Home Owners’ Loan Act.

6. Money Services Businesses

   Businesses registered with FinCEN under 31 U.S.C. 5330 and 31 CFR 1022.380 as money services or transmitting businesses.

7. Broker or Dealer in Securities

   Broker and dealers are defined in Sec. 3 of the Securities Exchange Act of 1934 and registered under Sec. 15.

8. Securities Exchange or Clearing Agency

   Exchange and clearing agencies are defined in Sec. 3 of the Securities Exchange Act of 1934 and registered under Sec. 6 or 17A (See link in #7, Broker or Dealer in Securities).

9. Other Exchange Act Registered Entities

   Other entities not included in 1, 7, or 8 above, that are registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (See link in #7, Broker or Dealer in Securities).

10. Investment Companies or Advisers

    Any investment company defined in Sec. 3 of the Investment Company Act of 1940 or advisors defined in Sec. 202 of the Investment Adviser’s Act of 1940, and registered with the Securities and Exchange Commission.

11. Venture Capital Fund Advisors

    Advisors that are described in Sec. 203(l) of the Investment Advisors Act of 1940 and has filed Item 10, Sch. A, and Sch. B of Part 1A of Form ADV with the Securities and Exchange Commission.

12. Insurance Companies

    Companies defined in Sec. 2 of the Investment Company Act of 1940.

13. State-licensed Insurance Producers

    Any entity that is under supervision by the insurance commissioner authorized by a State and has a physical operating presence in the U.S.

14. Commodity Exchange Act Registered Entities

    Registered entities under Sec. 1(a) of the Commodity Exchange Act, and those registered with the Commodity Futures Trading Commission.

15. Accounting Firms

    Any public accounting firm registered under Sec. 102 of the Sarbanes-Oxley Act of 2002.

16. Public Utilities

    Any regulated public utility that provides telecommunications services, electrical power, natural gas, or water and sewer services within the U.S.

17. Financial Market Utilities

    Utilities defined by the Financial Stability Oversight Council under Sec. 804 of the Payment, Clearing, and Settlement Supervision Act of 2010

18. Pooled Investment Vehicles

    All pooled investment vehicles operated or advised by a person described in 3, 4, 7, 10, or 11 above.

19. Tax-Exempt Entities

    In general, any entity that is described in Sec. 501(c) of the Internal Revenue Code that are exempt from U.S. tax, political organizations, trusts under Sec. 4947(a) of the Code.

20. Entities Assisting a Tax-Exempt Entity

    Defined as those who provide financial assistance to entities described in 19 above, is a U.S. person, is beneficially owned or controlled by exclusively one or more U.S. citizens, and receives the majority of its funding from those U.S. persons.

21. Large Operating Companies

    Companies that employ more than 20 full-time employees in the U.S., have a physical operating presence in the U.S., and have gross receipts totaling more than $5,000,000 reported on the preceding year Federal income tax return.

22. Subsidiaries of Certain Exempt Entities

    Any entity whose ownership interests are controlled or wholly owned, directly or indirectly, by one or more entities described 1-17, 19, or 21 described above.

23. Inactive Entities

    Companies in existence on or before January 1, 2020 and are not engaged in active business, not owned by foreign persons, and has no assets. Also, they must not have had any change in ownership or receive funds in an amount greater than $1,000 in the prior calendar or fiscal year.

Do You Need to File?

Assessing if a beneficial ownership report is necessary first requires you to assess if the entity is a domestic or foreign reporting company, which generally is (A) an entity created by filing of a document with a Secretary of State or (B) created under the laws of a foreign country and registered in the U.S.

If you meet this first requirement as a domestic or foreign reporting company, you next need to assess if any of these 23 Corporate Transparency Act exemptions apply. If no exemptions apply, you should be prepared to report beneficial ownership and control in 2024 under these new rules.

If you are unsure if your company is subject to these new filing requirements, we recommend consulting with your advisors for a thorough assessment.

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