Beneficial Ownership Information (BOI) Reporting in the United States

In an effort to combat illicit financial activities, the United States has implemented Beneficial Ownership Information (BOI) reporting requirements. This initiative, spearheaded by the Financial Crimes Enforcement Network (FinCEN), aims to enhance transparency and accountability in corporate structures. Here’s a comprehensive look at BOI reporting in the U.S.

What is BOI Reporting?

BOI reporting mandates that certain companies disclose information about the individuals who ultimately own or control them.?This requirement is part of the Corporate Transparency Act (CTA), enacted in 2021, which seeks to curb money laundering, terrorism financing, and other illicit activities facilitated by anonymous corporate entities.

Who Needs to Report?

The reporting requirements apply to “reporting companies,” which include corporations, limited liability companies (LLCs), and other similar entities created or registered to do business in the U.S.?However, there are exemptions for certain entities, such as large operating companies, regulated entities, and inactive entities.

What Information Must Be Reported?

Reporting companies must provide detailed information about their beneficial owners and company applicants. This includes:

• Beneficial Owners: Individuals who own or control at least 25% of the company or exercise substantial control over it.
• Company Applicants: Individuals who file the application to form the company or register it to do business in the U.S.

The required information includes the name, date of birth, address, and an identifying number from a government-issued document (e.g., passport, driver’s license) for each beneficial owner and company applicant.

How to File a BOI Report

Filing a BOI report is straightforward and can be done through FinCEN’s BOI E-Filing System. The process is secure and free of charge.?Existing companies must file their initial reports by January 1, 2025, while newly created or registered companies have 90 days from their formation or registration to file.

Importance of BOI Reporting

The introduction of BOI reporting marks a significant step towards eliminating corporate anonymity, which has long been exploited for illegal activities. By creating a centralized database of beneficial ownership information, the U.S.?aims to strengthen its financial system’s integrity and protect national security.

Compliance and Enforcement

FinCEN is committed to ensuring compliance with BOI reporting requirements. Companies that fail to report or provide false information may face significant penalties.?FinCEN also provides resources and guidance to help businesses understand and meet their reporting obligations.

Conclusion

BOI reporting is a crucial component of the U.S. government’s efforts to enhance corporate transparency and combat financial crimes. By understanding and complying with these requirements, businesses can contribute to a safer and more transparent financial environment.

____

About CFOLogic:

CFOLogic is an international CFO and FinOps firm. We have been working with tech businesses to optimise finance costs and maximise their peace of mind. Acting as extended finance teams for our clients, we have been providing support to accelerate their sustained growth by ensuring alignment within the finance function. Our experience has been with wide ranging businesses across industries, size, geographies, and lifecycle — from start-up to fundraise to scaleup to exit.

More about us: CFOLogic.com