The Financial Crimes Enforcement Network (“FinCEN”) is a bureau of the U.S. Department of the Treasury that collects and analyzes financial data to combat money laundering, terrorist financing, and other financial crimes. FinCEN implements the Corporate Transparency Act, and that act is what requires certain businesses to report Beneficial Ownership Information.
1. When does Beneficial Ownership Information have to be reported?
On March 2, 2025, the Treasury Department announced that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rule-making that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.
2. What is Beneficial Ownership Information?
Your business may need to report information about its beneficial owners if it is a corporation, LLC, or otherwise created in the U.S. by filing a document with a secretary of state or any similar office under the law of a state. An individual might be a beneficial owner through substantial control, ownership interests, or both. Reporting companies are not required to report the reason (i.e., substantial control or ownership interests) that an individual is a beneficial owner.
3. Where do you report Beneficial Ownership Information, and are there Penalties?
If you are required to file a Beneficial Ownership Information Report, you must do so ELECTRONICALLY through a secure filing system. This can be done for free at https://boiefiling.fincen.gov/. Failure to file a report can result in civil and criminal penalties, such as $500 a day per day for each day after the deadline with fines up to $10,000.00, and even imprisonment for up to two years.
Further Guidance
Many questions can be answered by FinCEN’s “Small Entity Compliance Guide,” which can be found on their website. However, it is always recommended to consult with an experienced business attorney for your small business needs. If you have any additional questions, schedule a consultation with The South Texas Business Lawyers today.
Contact The South Texas Business Lawyers today to learn more!