You may have heard about the new legislation that requires all business owners to file their unique Beneficial Owner information with the U.S. Government. Are you prepared to file?

Beneficial Owners

A beneficial owner is an individual who ultimately owns or controls a significant portion of a company’s equity or exercises substantial influence over its operations. This person may not necessarily be the legal owner recorded on official documents but holds true ownership rights. Criteria often include ownership of 25% or more of shares or voting rights. Beneficial owners can influence corporate decisions, profit from company success, or use their position for illicit activities. Identifying beneficial owners is crucial for transparency, regulatory compliance, and combating financial crimes like money laundering and terrorist financing.

Business owners who qualify under these descriptions are required to file their personal information with the U.S. Government through an organization called FinCEN. Owners of entities existing before January 1, 2024 have until the end of 2024 to file, while new entity owners must be reported within 60 days of origination. 

How to File your BOI Report

Here’s a breakdown of the process of filing a Beneficial Owner report through the Financial Crimes Enforcement Network (FinCEN):

1. Identification of Beneficial Owners: The business must identify individuals who meet specific criteria defining them as beneficial owners. These criteria typically include anyone who owns or controls a certain percentage of the company’s equity, usually 25% or more, or individuals who have significant control over the business operations.
2. Gathering Information: Once identified, the business must collect certain information about each beneficial owner, including their full legal name, date of birth, address, and Social Security number or other identifying numbers.
3. Filing the Report: The business then submits this information to FinCEN through the required reporting mechanisms. This can typically be done electronically through FinCEN’s website or through an approved API connected third party representative, such as Venture Vault.
4. Updating Information: It’s important for businesses to keep this information up to date. If there are any changes in beneficial ownership, the business must update its report with FinCEN accordingly.

Failure to Comply

Now, as for the potential legal repercussions of failing to comply with Beneficial Owner Reporting:

1. Civil Penalties: Non-compliance can result in significant civil penalties imposed by regulatory authorities. These penalties can include fines up to $591 per day, per entity, sanctions, or other punitive measures.
2. Criminal Charges: In severe cases of non-compliance or deliberate attempts to evade reporting requirements, individuals involved may face criminal charges. This could lead to fines, up to 2 years’ imprisonment, or both.

Conclusion

In summary, Beneficial Owner Reporting is a crucial aspect of regulatory compliance for businesses, particularly in the financial sector. Failing to comply with these reporting requirements can have serious legal and financial consequences, including civil penalties, criminal charges. It’s essential for business owners to understand and adhere to these regulations to avoid such repercussions, and to seek legal counsel for any and all questions regarding.