Overview

The Anti-Money Laundering Act of 2020, which is part of the National Defense Authorization Act for Fiscal Year 2021 and includes the Corporate Transparency Act (CTA), became law effective January 1, 2021.

In 2022, the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a rule implementing the beneficial ownership information (BOI) reporting requirements of the CTA. Unless exempt, the rule requires companies operating in the U.S., unless exempt, to file reports with FinCEN. In addition to information about the company itself, BOI reports must include details about each “beneficial owner,” individuals who exercise “substantial control” over the company (whether or not they are owners), and company applicants.

Entities formed before January 1, 2024 must file initial BOI reports by January 1, 2025. Entities formed after January 1, 2024 must file within 90 calendar days of formation. Failure to timely file the report can result in civil penalties of $500 a day and possible criminal penalties.

For more information, visit https://www.fincen.gov/boi.

FAQ

While certain types of entities are exempt, if you are a small corporation or LLC, you will likely be required to report your beneficial ownership information to FinCEN. A key factor in determining whether your company will have to report is whether you had to file a document with your state’s secretary of state or a similar office to create your company or, for foreign companies, register it to do business in the United States.

A beneficial owner is any individual exercises substantial control over the reporting company, or who owns or controls at least 25 percent of your company.

There can be up to two individuals who qualify as company applicants — (1) the individual who directly files the document that creates, or first registers, the reporting company; and (2) the individual that is primarily responsible for directing or controlling the filing of the relevant document. Your company is only required to report its company applicants if it is created or registered on or after January 1, 2024.

A reporting company will need to provide:

  • Its legal name and any trade name or DBA
  • Its address
  • The jurisdiction in which it was formed or first registered, depending on whether it’s a U.S. or foreign company
  • Its Taxpayer Identification Number (TIN)

For each of your company’s beneficial owners and each company applicant (if required), your company will need to provide the individual’s:

  • Legal name
  • Birthdate
  • Address (in most cases, a home address)
  • An identifying number from a driver’s license, passport, or other approved document for each individual, as well as an image of the document that the number is from

If your company is created or registered before January 1, 2024, file by January 1, 2025. Otherwise, file within 90 calendar days of receiving actual or public notice from your state’s secretary of state or similar office that your company was created or registered. FinCEN will accept reports electronically beginning January 1, 2024.

Your company will have 30 days to report any changes to reported information. For updates, the 30 days start from when the relevant change occurs. For corrections, the 30 days start after you become aware of, or have reason to know of, an inaccuracy in a prior report.

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