US Beneficial Ownership Information Registry
On January 1, 2024, the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) launched the online BOI E-Filing System and began accepting Beneficial Owner Information Reports pursuant to a new compliance regime under the Corporate Transparency Act.
1. Who needs to file?
Starting January 1, 2024, all non-exempt entities formed or registered to do business in the United States are required report Beneficial Owner Information (“BOI”) to FinCEN by January 1, 2025. This includes all corporations, LLCs, limited partnerships or similar entities created by filing a document with any US state, territory or Indian tribe as well as foreign non-US entities that are registered to do business with any US state, territory or Indian tribe.
2. Who is a beneficial owner?
A beneficial owner is any individual who, directly or indirectly:
- exercises “substantial control” over a reporting entity; or
- owns or controls 25% or more of the ownership interests (equity, stock, voting rights, convertible instruments or any other instrument, contract or other mechanism used to establish ownership) of a reporting entity.
An individual exercises “substantial control” of a reporting entity if such individual:
- serves as a senior officer (for example, president, CEO, COO, CFO, general counsel and any other key officer position of a reporting entity);
- has authority over the appointment or removal of any senior officer or a majority of the board of directors; or
- directs, determines or has substantial influence over important decisions made by a reporting entity.
3. What information needs to be provided?
A reporting entity is required to provide the following information about Beneficial Owners:
- full legal name;
- date of birth;
- current address; and
- unique identifying number and an image of government-issued identification (US passport, state-issued driver’s license, or a foreign passport).
4. Who is exempt from the Beneficial Ownership Information filings?
There are 23 exemptions, which are listed in greater detail in the Small Entity Compliance Guide by FinCen.
One of the key exemptions is for “large operating companies” that: (1) employ 20 full time employees in the US; (2) has a physical presence in the US; and (3) filed federal income tax for the previous year demonstrating more than $5,000,000 in gross receipts or sales.
Other key exemptions are for inactive entities that are not engaged in active business and for subsidiaries of any other exempt entities.
5. What does this mean for you?
If you are a beneficial owner of a US entity and not exempt from the filing requirements, failure to maintain and file a BOI Report by January 1, 2025 may result in fines up to $500 per day per violation and potential imprisonment.
Please reach out to the Voyer Law team to discuss your Beneficial Ownership Information filing requirements and whether your entity qualifies as an exempt entity.