The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) issued the final rule implementing the bipartisan Corporate Transparency Act (CTA) beneficial ownership information (BOI) reporting provisions on September 29, 2022. And the effective date of the rule will be January 1, 2024.

The rule will require most corporations, LLCs, and other entities created or registered to do business in the United States to report information about their beneficial owners (those who ultimately own or control the company) to FinCEN. This provision is intended to prevent drug traffickers, fraudsters, and corrupt actors such as oligarchs, and proliferators from laundering or hiding money and other assets in the United States. The final rule indicates who must file a BOI report, what information must be reported, and when the report is due. Specifically, the rule requires reporting companies to file reports with FinCEN that identify two categories of persons: (1) the beneficial owner of the entity; and (2) the company applicant of the entity.

Reporting Companies

The rule identifies two types of reporting companies: Domestic and Foreign. A domestic reporting company includes a corporation, limited liability company (LLC), or any entity created by filing with the Secretary of State or any similar office under the laws of a state or Indian tribe. A foreign reporting company is a corporation, LLC, or other entity created under the laws of a foreign country and registered to do business in any state or tribal jurisdiction by filing with the Secretary of State or any similar office.

Beneficial Owners

Under the rule, beneficial owner includes any individual who directly or indirectly (1) exercises substantial control over the reporting company, or (2) owns or controls at least a 25% ownership interest in the reporting company.

Company Applicants

The rule defines a company applicant to be only two persons:

1. The individual who directly files the documents creating the entity or, in the case of a foreign reporting company, the documents for the first registration of the entity to do business in the United States.
2. The individual who is primarily responsible for directing or controlling the filing of relevant documents by another individual.

Beneficial Ownership Information Reports

When submitting a BOI report, the information to be indicated is.

1. Name
2. Date of Birth
3. Address
4. A unique identifying number
5. Issuing Jurisdiction from an acceptable identification document (and the image of a such document)
   
   ·  Reporting companies created or registered prior to January 1, 2024 will have one year (until January 1, 2025) to submit their initial reports.
   ·  Reporting companies created or registered after January 1, 2024 will have 30 days from the date they receive their notice of creation or registration to submit their initial report.

Reference:
https://www.fincen.gov/boi
https://www.fincen.gov/beneficial-ownership-information-reporting-rule-fact-sheet
https://www.fincen.gov/news/news-releases/fincen-issues-final-rule-beneficial-ownership-reporting-support-law-enforcement
https://www.federalregister.gov/documents/2022/09/30/2022-21020/beneficial-ownership-information-reporting-requirements#citation-115-p59513