Deadline Approaching: BOI Filing Due January 1, 2025

As we are 3 months away from the 2025 deadline, the U.S. Government is requiring businesses to report Ultimate Beneficial Owners (UBOs). At Venture360, we've been tracking this level of detail for our clients since 2015. Here’s what you need to know as we approach this key compliance milestone.

How Can I Prepare for the Corporate Transparency Act?

These reporting requirements affect organizations across the venture investment spectrum, from startups to funds and SPVs, extending to underlying investors through passthrough entities.

The great news? If you’re using Venture360’s reporting software, you’re already prepared! Our platform is designed to track beneficial ownership, which automates your compliance with UBO reporting requirements. There’s no additional action required on your part.

If your fund or SPV syndicate isn’t using Venture360 yet, let’s discuss how we can help ensure your compliance while streamlining accounting, tax, and portfolio monitoring to minimize costs.

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What is the Corporate Transparency Act?

The Corporate Transparency Act is a crucial piece of anti-money laundering legislation designed to prevent the concealment of ownership for corporations, LLCs, and similar entities within the United States. The law aims to fight tax fraud, money laundering, and other illegal activities by mandating the collection of beneficial ownership data at the federal level. Congress asserts that gathering this information is vital to safeguarding the nation's interests and bolstering efforts to combat unlawful behaviors.

What is Beneficial Ownership Information (BOI) Reporting?

Beneficial Ownership Information (BOI) Reporting, issued by the Financial Crimes Enforcement Network (FinCEN), requires business owners to submit personally identifiable information about their underlying investors. While the concept of beneficial ownership has existed for years, the formal regulations enforcing these reporting requirements have been recently issued by FinCEN.

Which Companies Have to File a BOI Report?

Any "reporting companies" must file a BOI report with FinCEN. Reporting companies include corporations, LLCs, and other entities formed by filing documentation with a secretary of state or similar office, whether in the U.S. or abroad.

In short, this applies to all the startups you invest in, as well as the funds, SPVs, and other vehicles you use for your investments.

When Does the Initial BOI Report Need to Be Filed?

If your domestic reporting company was established before January 1, 2024, the initial BOI report must be filed by January 1, 2025.

What Are the Penalties for Noncompliance?

Noncompliance with BOI reporting requirements can lead to significant penalties. Failing to submit a required report or neglecting to amend a report within the specified timeframe may result in a daily fine of $500, up to a maximum of $10,000.

Deliberate failures or knowingly providing false information are considered felonies, potentially leading to up to two years in prison. If these actions are connected to anti-money laundering violations, the prison sentence can extend up to 10 years.

Are There Any Exemptions?

Yes, but they are limited. There are 23 categories of entities exempt from BOI reporting under the Corporate Transparency Act. For a full list of exemptions, visit FinCEN's FAQ site here.

If your current fund administrator isn’t fully meeting your needs, schedule a call with us to explore how we can provide better support.