information return for the previous year, showing it had more than $5 million in gross receipts or sales. What Is Needed for BOI Reports? When filing BOI reports with FinCEN, the rule requires a reporting company to identify itself and information about each of its beneficial owners. The CTA defines a beneficial owner of an entity as any individual who, directly or indirectly, (1) exercises substantial control over the entity or (2) owns or controls at least 25% of the ownership interests of a reporting company. The required BOI is name, birthdate, address, and a unique identifying number and issuing jurisdiction from an acceptable identification document (and the image of such document). In addition, the rule requires that reporting companies created after Jan. 1, 2024, provide the four pieces of information and document image for beneficial owners. If an individual provides the four pieces of information to FinCEN directly, the individual may obtain a “FinCEN identifier,” which can then be provided to FinCEN on a BOI report in lieu of the required information about the individual. When Does BOI Reporting Become Effective? The rule is effective Jan. 1, 2024. Reporting companies created or registered before Jan. 1, 2024, will have one year (until Jan. 1, 2025) to file their initial reports, while reporting companies created or registered after Jan. 1, 2024, will have 30 days after creation or registration to file their initial reports. Once the initial report has been filed, both existing and new reporting companies will have to file updates within 30 days of a change in their BOI. The BOI reporting rule is one of three rulemakings planned to implement the CTA. Rule Two/Access Rule FinCEN will engage in additional rulemaking to establish who may access the BOI database for what purpose and what safeguards will be required to help ensure the information is secured and protected. On Dec. 16, 2022, FinCEN issued a notice of Proposed Rulemaking, which would implement the provisions stated above. Rule Three/Revising Customer Due Diligence (CDD) FinCEN will be revising the CDD rule no later than one year after the effective date of the reporting rule — as required by the CTA. The language seems to indicate no later than Jan. 1, 2025, so more patience will be required. The CTA and its subsequent rules present significant updates to the U.S. antimoney laundering laws. It will provide law enforcement agencies greater access to the beneficial ownership information of entities. In addition, it will remove the burden of collecting customer due diligence information from financial institutions by mandating self-reporting of information by customers, thereby allowing financial institutions to simply obtain required information from the federal government. FinCEN acknowledges it has a great deal of work to do prior to Jan. 1, 2024; thus, it has begun developing materials to educate and guide reporting companies through the filing of BOI reports. Furthermore, it has developed a page on FinCEN’s website dedicated to BOI reporting requirements, which will be updated regularly, and a call center available by phone or email designed to assist businesses with additional questions. So initiate the conversations and start preparing today. This article is for general information purposes only and is not to be considered as legal advice. This information was written by qualified, experienced professionals at FORVIS, but applying this information to your particular situation requires careful consideration of your specific facts and circumstances. Consult a professional at FORVIS or legal counsel before acting on any matter covered in this update. Murphy Ray is a member of the FORVIS Financial Services Group. He works directly with financial institutions, assisting them with regulatory compliance. For more information, please visit www.forvis.com. Sources “Beneficial Ownership Information Reporting Rule Fact Sheet.” Beneficial Ownership Information Reporting Rule Fact Sheet | FinCEN.gov, US Treasury Financial Crimes Enforcement Network, 29 Sept. 2022, https://www.fincen.gov/beneficialownership- information-reporting-rule-fact-sheet. Das, Himamauli. “Prepared Remarks of FinCEN Acting Director Himamauli Das During the Acams AML Conference.” Prepared Remarks of FinCEN Acting Director Himamauli Das During the ACAMS AML Conference | FinCEN.gov, US Treasury Financial Crimes Enforcement Network, 12 Oct. 2022, https://www.fincen.gov/news/speeches/ prepared- remarks-fincen-acting-director-himamaulidas-during-acams-aml-conference. Dieckman, Sarah. “A New Reporting Requirement: The Corporate Transparency Act’s Impact on Business Owners.” UC News, 4 Nov. 2022, https://www.uc.edu/news/articles/2022/11/ gc-a-new-reporting-requirement--the-corporate- transparency-acts-impact-on-business-owners.html. Feldman, S. (2022, October 11). CT Expert Insights: Understanding the Corporate Transparency Act (CTA) Reporting Requirements, with Sandra Feldman. Wolterskluwer.com. Retrieved February 15, 2023, from https://www.wolterskluwer.com/en/expertinsights/understanding-the-corporate- transparencyact-reporting-requirements Goldman, L. A., & Marella, D. J. (2021, January 29). The Corporate Transparency Act: Augmented Federal Anti-Money Laundering Legislation Brings New Reporting Requirements of Company Ownership. Americanbar.org. Retrieved February 15, 2023, from https://www.americanbar.org/groups/ business_law/publications/blt/2021/02/corp- transparency-act/ 35
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