Understanding the new Beneficial Ownership Information Reporting Requirement

The BOIR (Beneficial Ownership Information Reporting) requirement is a regulatory mandate aimed at enhancing transparency regarding the ownership structures of entities. This requirement is part of broader efforts to combat money laundering, tax evasion, and other financial crimes. Here are the key aspects of the new BOIR requirement.

• Beneficial Ownership Definition: Entities must identify and report individuals who ultimately own or control the entity, typically those holding a significant percentage of ownership or voting rights.

• Which Entities Have to Report: Companies that may need to report include: a corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or a foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.

• Exclusions: Twenty-three types of entities are exempt from beneficial ownership information reporting requirements, including publicly traded companies, nonprofits, and certain large operating companies. For more information on exclusions, review Financial Crimes Enforcement Network (FinCEN) Small Entity Compliance Guide: https://www.fincen.gov/boi/small-entity-compliance-guide

• Reporting Obligations: Companies are required to submit beneficial ownership information to FinCEN. Filings include details such as names, addresses, dates of birth, and identification numbers of beneficial owners.

• Frequency of Reporting: Currently this is a one-time requirement however FinCEN may stipulate how often companies need to update their beneficial ownership information, such as annually or whenever there are changes in ownership.

• Compliance and Enforcement: There may be penalties for non-compliance, including fines or other legal repercussions for failing to accurately report beneficial ownership information.