FinCEN Issues Final Rule for Beneficial Ownership Reporting
September 29, 2022
The Financial Crimes Enforcement Network (FinCEN) on Sept. 29 issued a final rule implementing its new beneficial ownership information (BOI) reporting requirements. This is the first of three rules that FinCEN is putting out to implement the Corporate Transparency Act (CTA). ALTA has been actively engaged with FinCEN as a part of this process and submitted two comment letters as a part of the rulemaking.
Currently, ALTA is reviewing the rule and will provide resources to assist members in understanding how it will impact their businesses. The rule outlines who must file a BOI report, what information must be reported and when a report is due. The effective date for the rule is Jan. 1, 2024
One important highlight is that FinCEN appears to have incorporated ALTA’s recommendations by limiting the number of companies that will be excluded from requirements to file BOI reports. This is critical because it makes it more likely that FinCEN will reduce reporting obligations for financial institutions like title companies that have to comply with the Geographic Targeting Order.
Under the system, companies will have to file a report containing:
- Information about the entity, including full legal name, DBAs, address, state of incorporation and IRS TIN.
- Identification of each beneficial owner’s full legal name, date of birth, current residential street address, and unique identifying number from an acceptable identification document. Consistent with the GTO, a person is a beneficial owner if they exert substantial control over the business or own 25% of the business.
- An image of the beneficial owners identifying document.
Corporations, LLCs or other legal entities created after Jan. 1, 2024, will have to file their initial registration within 30 days of filing incorporation papers with the state. This was increased from the 14 days in the proposed rule. FinCEN is working on partnerships with states to streamline the process so that BOI data can be filed at the time a company incorporates. For existing companies (or those created in 2023), the filing deadline is Jan. 1, 2025. Companies will also have 30 days to update their BOI reports when the beneficial ownership changes. FinCEN estimates it will take 70 minutes and $85 dollars to file the initial BOI submission.
To address concerns about accuracy of the BOI data, the final rule requires each reporting company to certify that its report are “true, correct, and complete.” This is similar to the certification used in filing IRS forms. Importantly, the certification is made by the entity and not the person completing the report.
FinCEN will soon engage in additional rulemakings to
- Establish rules for who may access BOI, for what purposes, and what safeguards will be required to ensure that the information is secured and protected
- Revise FinCEN’s customer due diligence rule following the promulgation of the BOI reporting final rule. ALTA will continue to provide feedback and submit additional comments as FinCEN moves through implementing the CTA.
ALTA will work with its membership and workgroups and committees as this process moves forward.
Contact ALTA at 202-296-3671 or [email protected].