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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:
- Determine whether your entity is subject to the BOI rule’s reporting requirements.
- Stay informed of regulatory changes and deadlines related to the BOIR.
- Ensure that beneficial ownership information is accurate and kept up to date.
- Submit the BOIR within the specified timeframe.
- 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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