Inflation Adjustments Spike BOI Reporting Violation Penalties

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BOI Reporting Violation Penalties Increase

The beginning of this year marked a pivotal shift in the financial regulatory environment with the implementation of requirements for the reporting of beneficial ownership information (BOI). This development is accompanied by a significant rise in civil monetary penalties for breaches related to BOI reporting and the unauthorized dissemination or usage of such data. The changes are encapsulated in the annual final rule released by the Financial Crimes Enforcement Network (FinCEN), which for the first time incorporates penalties for failing to comply with BOI reporting rules. The recent updates, officially documented in the Federal Register, stem from the obligatory inflation adjustments outlined by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. These adjustments have escalated the penalties for BOI reporting failure and for the unauthorized use or disclosure of BOI to $591 per day from the previous $500, effective January 25, 2024. This increase traces to the Corporate Transparency Act (CTA) of 2021, under which the requirements for BOI reporting were established. Despite the CTA becoming law in 2021, the regulations necessitating BOI submissions by FinCEN were not immediately active, leading to a delay in the publication of associated penalties. This adjustment is not solely for BOI violations; the final rule also escalates penalties for a range of other infractions, including willful or grossly negligent recordkeeping breaches and deliberate offenses against the Bank Secrecy Act (BSA) requirements. While the final rule extensively details the adjustments in civil penalties, it’s crucial to note that there are also significant criminal penalties associated with BOI reporting violations and unauthorized use or disclosure of BOI. These criminal penalties, which were not covered in the annual final rule, underscore the gravity of compliance failures.

Are You Prepared to File?

Failure to report BOI can lead to criminal charges with penalties reaching up to $10,000, and unauthorized redisclosure of BOI may incur penalties of up to $250,000. These stringent criminal repercussions highlight the critical need for adherence to the reporting requirements and the severe consequences for violations beyond the scope of civil fines.

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