The Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department issued a final rule which requires companies to disclose information about their "beneficial owners," in a move to combat money laundering. These rules were enacted to implement section 6403 of the Corporate Transparency Act (CTA) of 2021.
According to the FinCEN's Beneficial Ownership Information (BOI) Reporting Rule Fact Sheet, "this rule will enhance U.S national security by making it more difficult for criminals to exploit opaque legal structures to launder money, traffic humans and drugs, and commit serious tax fraud and other crimes that harm the American taxpayer."
The final rule describes:
- who must file a BOI report;
- what information must be reported; and
- when a report is due.
Moreover, the final rule requires reporting companies to file reports with FinCEN that identify two categories of individuals:
- the beneficial owners of the entity; and
- the company applicants of the entity.
According to the final rule, a beneficial owner includes any individual who, directly or indirectly, either:
- exercises substantial control over a reporting company; or
- owns or controls at least 25% of the ownership interests of a reporting company.
Further, the term company applicants are defined as:
- the individual who directly files the document that creates the entity, or in the case of a foreign reporting company, the document that first registers the entity to do business in the United States; or
- the individual who is primarily responsible for directing or controlling the filing of the relevant document by another.
The BOI Reports require a reporting company to identify itself and report four pieces of information about each of its beneficial owners:
- name;
- birthdate;
- address; and
- unique identifying number from documents like passports.
Lastly, in terms of filing requirements, "reporting companies created or registered before 1 January 2024 will have 1 year (until 1 January 2025) to file their initial reports, while reporting companies created or registered after 1 January 2024, will have 30 days after receiving notice of their creation or registration to file their initial reports."