Do You Know What the BOI Report Is and Who Needs to File It?

Financial transparency is becoming increasingly crucial, and the US Financial Crimes Enforcement Network (FinCEN) has introduced new Beneficial Ownership Information (BOI) reporting requirements. These regulations aim to prevent illegal financial activities by requiring certain entities to disclose their beneficial ownership information. If you operate a company that has any dealings with the US, understanding these requirements is essential to ensure compliance and avoid significant penalties.

What is a Beneficial Ownership Information Report?

A Beneficial Ownership Information (BOI) Report is a critical disclosure that identifies the individuals who ultimately own or control a company, known as beneficial owners. Under the new FinCEN regulations, companies must report specific details about these individuals, including their full legal name, date of birth, residential address, and a unique identifying number (such as a driver’s license or passport number). This report is essential in creating a transparent corporate environment that hinders illicit financial activities by making it harder for criminals to hide behind complex corporate structures.

Who Needs to File the BOI Report?

The BOI reporting requirements primarily affect companies that are formed or registered to do business in the United States. This includes both domestic companies and foreign entities with significant U.S. operations. However, there are exemptions, such as large operating companies with more than 20 full-time employees and over $5 million in gross receipts or sales, certain regulated entities, and inactive companies that may not need to file. It is essential for businesses to evaluate their status and determine if they fall under the reporting requirements to ensure compliance.

Here are the reporting companies that need to file the BOI report:

• Domestic reporting companies include limited liability companies (LLCs), corporations, and any other entities created by filing a document with a secretary of state or similar office within the United States
• Foreign reporting companies are entities, such as corporations and LLCs, formed under foreign laws but are registered to do business in the United States by filing a document with a secretary of state or similar office
• Special cases such as trusts and foundations that were created by filing a document with a secretary of state or similar office also come under a reporting company that needs to file the BOI report

What Happens If You Don’t Report?

Failing to file a BOI report can lead to serious consequences. Companies existing before January 1, 2024, have until January 1, 2025, to file their initial BOI report. Newly created or registered companies between January 1, 2024, and January 1, 2025, must file within 90 calendar days of receiving notice of their formation. For those created on or after January 1, 2025, the deadline is 30 calendar days after the notice. Additionally, companies that lose their exemption status must file within 30 days of this change.

Non-compliance can result in severe penalties, including fines of upwards of $500 per day and a prison sentence of two years.

Conclusion

With FinCEN's new BOI reporting requirements, the landscape of financial transparency is evolving. Companies with any connection to the U.S. must take these regulations seriously, as non-compliance can result in severe penalties. By understanding what a BOI report is and determining whether your company needs to file it, you can stay ahead of the curve and avoid any legal complications.

For a more in-depth understanding, visit UK Property Accountants or read our article on Beneficial Ownership Information Reporting.