We want to bring to your attention a new informational reporting, BOIR, required by FinCEN, a bureau of the US Department of Treasury. This new requirement became effective as part of the Corporate Transparency Act (CTA) on 1 January 2024 and applies to certain entities and their beneficial owners.
Whilst we are unable to assist with BOIR reporting, we wanted to bring this to your attention so that you may seek the appropriate advice and take necessary action in advance of the relevant deadline(s).
Why is this required?
The BOIR provisions were created to enable the US to identify the beneficial owners of certain entities doing business in the US to assist in protecting US national security and the US financial system from illicit use while combating illegal activities, money laundering, etc.
Who should be interested?
A ‘reporting company’ – which includes US domestic entities created in the US by filing a document with a Secretary of State such as corporations and LLCs as well as foreign entities who are registered to do business in any US state. Certain entities are exempt from filing. The beneficial owners (i.e. individuals with substantial control) of each reporting company should also be interested as their personal information will be disclosed.
What information is required?
A reporting company will need to provide certain information relating to the entity as well as the beneficial owners of the entity. Generally, beneficial owners are those that own at least 25% of an entity as well as those that have control over the entity regardless of ownership. In the case of beneficial owners that are minors (generally, under the age of 18), their parent/guardians should be reported as the beneficial owner.
The BOIR includes details on the entity (name, address, etc.) to identify itself and information about each of its beneficial owners (name, address, DOB, identification number, as well as a photo copy of their identification (passport, driver’s license, etc.)). Reporting companies created from 1 January 2024 will also need to provide information on the person filing the BOIR on behalf of the company/beneficial owner.
What are the deadlines?
Reporting companies created or registered before 1 January 2024 will have until 1 January 2025 to file their initial reports. Reporting companies created on or after 1 January 2024 will have 90 days from creation/registration to file their initial reports. Reporting companies established from 1 January 2025 will only have 30 days.
Any updates/revisions to an initial report made must be reported within 30 days. Updates/revisions that trigger reporting requirements are any changes in beneficial owners or their reported information – examples include change of persons in control, changes of ownership via sale or gift, and address changes.
Can penalties be assessed?
Wilfully failing to file BOIR or provision of false information can result in significant financial and/or criminal penalties.
More information
If you believe you may be a beneficial owner of a reporting company or connected to a reporting company, we recommend you consult the agent/lawyer who assisted in establishing the US entity or registering it to do business in the US. In addition, the below links may be of assistance:
BOI Informational Brochure 508C.pdf (fincen.gov)