Understanding the New FinCEN BOI Federal Filing Requirement for Small Businesses

The new FinCEN beneficial owner filing law requires small US businesses to register owner details online. Non-compliance can lead to severe penalties. We offer free consultations to help.
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Beginning in 2024, the US has a new mandate from the Financial Crimes Enforcement Network (FinCEN) to register the Beneficial Ownership Information (BOI) for every business in the country. With over 33 million businesses registered in the United States, and over 14,000 new ones created every day, this is a significant undertaking.

What is the FinCEN BOI Requirement?

The FinCEN BOI requirement is a new rule that mandates small businesses to report the details of their beneficial owners to FinCEN. This information is used strictly for investigations into potential financial crimes.

What is a Beneficial Owner?

A beneficial owner is an individual who ultimately owns or controls a business entity, either directly or indirectly. This includes individuals who own 25% or more of the business’s equity, as well as those who have significant control over the business’s management.

Who is Affected?

The BOI requirement applies to all small businesses registered in the United States, including corporations, limited liability companies (LLCs), partnerships, and sole proprietorships. However, certain types of businesses, such as publicly traded companies and financial institutions, are exempt from this requirement.

What Information is Needed?

Each beneficial owner must register their legal name, residential address, date of birth, and a copy of a government-issued, non-expired identification document (such as a driver’s license or passport).

When to File?

All entities created before 2024 must file by the end of 2024. However, new entities created in 2024 must file within 90 days of filing their new entity with the Secretary of State.

Who can File?

Anyone authorized by the business can file on behalf of the business. This can be one of the business owners, or an authorized attorney or accountant. The individual filing the information will need to disclose additional details and certify the information being provided is truthful and accurate.

Steps for Filing

Compliance with the BOI requirement involves several steps:

  1. Identify your beneficial owners: These are individuals who directly or indirectly own 25% or more of the business, or have significant control over it.
  2. Gather the required information: Collect all necessary personal information and copies of identifying documents for each beneficial owner.
  3. Submit the information: File the information using the FinCEN’s online reporting system.

Remember, this process is completely free, but non-compliance could lead to fines and potential criminal prosecution..

Duty to Maintain

Once the initial filing is complete, businesses are required to maintain accurate and up-to-date BOI information. Any changes to the beneficial ownership must be reported to FinCEN within 90 days. This includes changes in ownership, control, or any other relevant information.

Penalties for Non-Compliance

Willfully failing to adhere to the BOI requirement can result in severe consequences, including a civil penalty of up to $500 for each day that the violation continues, or criminal penalties of fines up to $10,000, and up to two years of imprisonment.

Why is it Important?

This requirement is part of an ongoing government effort to increase transparency and prevent illicit activities such as money laundering and terrorism financing.

If you have questions about how to comply with the FinCen BOI requirements, or other business governance matters, book a free consultation with our experienced attorney.

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