Banking On Knowledge

As part of the Corporate Transparency Act passed by Congress in 2021, the U.S. government's Financial Crimes Enforcement Network (FinCEN) is now requiring many businesses to report information about the individuals who ultimately own or control them to the U.S. Department of the Treasury. 

What Information Is Required?

Businesses must share who their beneficial owners are. A beneficial owner is an individual who either directly or indirectly exercises substantial control over the reporting company, or who owns or controls at least 25 percent of the reporting company's ownership interests. See FinCEN's Small Entity Compliance Guide for checklists and examples to help identify beneficial owners.

Who Will This Affect?

Corporations, limited liability companies, and any other entities that were created by filing a document with the secretary of state or any similar office in the U.S. must register. Corporations and limited liability companies formed under the law of a foreign country that have registered to do business in the U.S. through the same filing system must also register.

There are 23 types of entities that are exempt from the reporting requirements, including sole proprietorships.  Reference the Small Entity Compliance Guide for help identifying whether or not a company must register.

Why Is This Required?

According to FinCEN, the reporting requirement is part of the U.S. government’s efforts to make it harder for “bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.”

When Is The Registration Deadline?

Companies created or registered to do business before Jan. 1, 2024, will have until Jan. 1, 2025, to file initial beneficial ownership information reports.

Companies created or registered on or after Jan. 1, 2024, and before Jan. 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial beneficial ownership information report.

Companies created on or after Jan. 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their reports.

How Do I Register?

If your company is required to report beneficial ownership information to FinCEN, you will do so electronically through a secure filing system on FinCEN’s website. Access the form by clicking “File BOIR.”

Where Can I Learn More?

To learn more about FinCENs beneficial ownership information requirement, and to access FAQs and detailed qualification and exemption requirements, visit fincen.gov/boi.

Please note: This message is intended as a courtesy to our customers. Western State Bank cannot register on a business' behalf, but we are happy to assist our customers in navigating the process. Please reach out to your local banking center if you have any questions.

All information in this article came from Fincen.gov on 2/13/24. Please visit their website for updates.