U.S. treasury’s newest requirement for beneficiary ownership disclosure
- Introduction
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) on September 29, 2022 issued a final rule establishing a beneficial ownership information (BOI) reporting requirement, pursuant to the Corporate Transparency Act (CTA). The aim is to increase U.S. government efforts to crack down on illicit finance and enhance transparency and stability.
For many years ago, owing to the criminals always hide and move money through anonymous shell companies and other corporate structures, lots of illicit activities were appeared increasingly and affect national security in the United States. By issuing a final rule, most companies have to file their Beneficial Ownership Information (BOI) reports to FinCEN and this rule will help to curb illicit activities and provide a safety environment to taxpayer and business for operation.
- Reporting Companies
This rule is appliable for most corporation, limited liability companies and other foreign-owned entities doing business in US to report information about their beneficia owners. Except some certain exemptions, limited liability partnership, limited liability limited partnerships, business trusts are also require to submit this reports.
In addition, Anti-Money Laundering (AML), sanctions and Know Your Customer (KYC) programs should be assessed by all required companies.
- Beneficial Owners
The final BOI reporting rule provide a definition and guideline for beneficial owner:
Any individual who, directly or indirectly has substantial control over the reporting company, or
Any individual who owns or controls at least 25% of the ownership interests of a reporting company.
Besides that, there are five types of individuals are exempted from “beneficial owner?
- Reporting Deadline and Content
This final BOI reporting rule is effective beginning January 1, 2024. Reporting companies created or registered before January 1, 2024, will have one year to file their initial reports, while reporting companies created or registered after January 1, 2024, will have 30 days after creation or registration to file their initial reports. Besides that, once the initial report has been filed, both of reporting companies will have to file updates within 30 days for change of their beneficial ownership information.
A reporting company must include the following information of each beneficial owner on their BOI report:
(1) Full name, date of birth and current address,
(2) Unique identifying number and image from identification document, and
(3) Voluntary TIN.
- Conclusion
Through issuing a final rule for Beneficial Ownership Reporting by FinCEN will help to stop criminal actors and support national security, intelligence, and law enforcement agencies in their work to curb illicit activities and create a safety and stability environment in economy. |
