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The Financial Crimes Enforcement Network (FinCEN) has established rigorous Beneficial Ownership Information (BOI) regulations under the Corporate Transparency Act (CTA). Compliance with FinCEN BOI regulations is crucial for businesses to avoid penalties and maintain transparent operations.
Here are some key tips to help ensure compliance with FinCEN BOI regulations:
1. Understand the Scope of FinCEN BOI Regulations
The CTA requires certain entities to report their beneficial owners to FinCEN. It’s essential to know if your business falls under these requirements! Generally, the regulations apply to corporations, limited liability companies, and other similar entities created or registered in the U.S. This captures about 90% of all entities existing in 2024.
2. Identify Beneficial Owners Accurately
A beneficial owner is an individual who directly or indirectly owns or controls 25% or more of the company or exercises substantial control over the company. Identifying these individuals accurately is critical, and typically involves:
- Determining ownership percentages
- Understanding the roles and control each owner has within the company
3. Maintain Detailed Records
Keeping meticulous records of beneficial ownership and any changes in ownership is vital., including:
- Ownership percentages
- Control roles, responsibilities, and the individuals with them
- Ensuring details about beneficial owners stay up to date
- Tracking changes to business information (i.e. registering new DBAs, changing principal address, etc.)
4. Stay Updated on Regulatory Changes
FinCEN has updated its guidance and FAQs on BOI reporting requirements in the last year. Keep a look out for these updates to ensure ongoing compliance and capturing new information. Subscribe to FinCEN updates and regularly review their website for new information.
5. Use a Secure BOI Reporting Software
Implementing BOI reporting software that complies with FinCEN BOI regulations can simplify the reporting process. Look for software that offers:
- Secure data handling and storage
- Automated reporting features
- Regular updates to align with changing regulations
6. Train Your Team
Identify who on your team will be keeping track of BOI in the future. Ensure they are well-trained in the requirements and procedures for BOI reporting. Comprehensive training sessions, including the review of FinCEN’s guidance can help maintain awareness and accuracy in reporting.
7. Consult with Compliance Experts
Engaging with compliance professionals or legal advisors who specialize in FinCEN regulations can provide invaluable insights, especially for those entities entangled in complex ownership structures. They can help you navigate complex situations and ensure your reporting is accurate and every aspect has been considered.
8. Report Changes Promptly
Any changes in beneficial ownership information must be reported to FinCEN within 30 days of the change occurring. Prompt reporting helps maintain compliance and avoid potential penalties.