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As the regulatory landscape continues to evolve, one area that has garnered significant attention is the Beneficial Ownership Information (BOI) reporting requirement under the Corporate Transparency Act (CTA). For CPAs, attorneys, and other professionals working with business clients, it’s essential to ensure that clients understand their BOI reporting obligations.
This not only helps clients stay compliant but also mitigates the risk of penalties and legal issues. Whether or not you plan to assist with BOI reporting, you should take it upon yourself to make sure that clients are aware of BOI reporting obligations.
Understanding BOI Reporting Obligations
The BOI reporting requirement mandates that certain entities disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This is intended to enhance corporate transparency and combat illicit financial activities.
However, the complexity of BOI regulations means that many clients may not fully understand their responsibilities, making it imperative for professionals who are aware of CTA reporting to provide clear guidance or refer clients to resources where they can receive help.
Best Practices for Educating Clients
Start with the Basics
Begin by explaining what BOI reporting is and why it matters. Clients need to understand that BOI reporting is not just a bureaucratic requirement but a critical component of national efforts to prevent money laundering and other financial crimes.
Clarify Who Needs to Report
Not all entities are required to submit BOI reports. Educate your clients on the specific criteria that determine whether they need to report (you may want to take a look at the 23 types of exempt entities in case you are able to point them in the right direction for an exemption they might meet).
Explain the Consequences of Non-Compliance
Emphasize the importance of timely and accurate reporting by outlining the penalties for non-compliance. This includes potential fines, legal action, and reputational damage. Clients are more likely to take their obligations seriously when they understand the risks of non-compliance. Most entities have until January 1, 2025, to file which is coming up quickly.
Use Clear, Non-Technical Language
Avoid legal jargon and technical terms that might confuse clients. Instead, use straightforward language and practical examples to explain BOI reporting requirements. This approach makes the information more accessible and easier to understand.
Provide Resources and Tools
Offer clients resources such as checklists, templates, and guides to help them navigate the reporting process. Refer clients to FinCEN’s BOI website where they can access compliance guides and read FAQs.
Schedule Regular Updates
The regulatory environment is dynamic, and BOI reporting requirements may change over time. Stay informed about any updates and proactively communicate these changes to your clients.
Encourage Professional Assistance
Finally, remind clients that they don’t have to navigate BOI reporting alone. Encourage them to seek professional advice when needed, whether from you, their CPA, attorney, or a compliance expert. This ensures that they have the support they need to meet their obligations accurately and on time.
Conclusion
There is expected to be 32.6 million BOI Reports filed by the end of 2024. As of August 2024, only about 2.7 million entities have filed. Educating clients about BOI reporting obligations is critical at a time like this. By following these best practices, CPAs, attorneys, and other professionals can help their clients understand and fulfill their reporting requirements, ultimately contributing to a more transparent and accountable financial system.
