New Beneficial Ownership Reporting Rules

Business entities across the U.S. face new regulations requiring the disclosure of beneficial ownership information to promote financial transparency. The Corporate Transparency Act, passed by Congress in 2021, establishes reporting requirements for corporations, LLCs, and similar entities regarding the natural persons who ultimately own or control them. 

 

For financial crimes investigators, insight into the actual human beings behind opaque corporate structures is crucial. However, many current business formation practices allow anonymity that enables illicit finance flows, including money laundering, tax evasion, and terror financing. The new beneficial ownership reporting aims to lift this veil.

 

While improving transparency, the rules also create compliance obligations for millions of U.S. businesses. As your trusted advisors, we want to ensure you understand these important requirements. Here’s what companies need to know about beneficial ownership reporting:

Who Must Comply?

The following newly formed or registered entities must comply:

• Corporations (any form)
• Limited Liability Companies (LLCs) 
• Limited Partnerships
• Limited Liability Partnerships

Exemptions exist for:

• Large companies already reporting ownership information publicly 
• Certain entities posing low risks like government agencies, banks, publicly traded companies, etc.

 

Our team can definitively assess if your business needs to comply or qualifies for exemption.

What Information Must Be Reported?

For each reporting company, the following beneficial ownership and company applicant information must be reported:

Beneficial Owners:

• Full legal name 
• Birthdate
• Current residential or business address
• Unique identifying number from an acceptable ID document
• Image of the ID document 

Company Applicant:

• Full legal name
• Birthdate 
• Current residential or business address
• Unique identifying number from an acceptable ID document  
• Image of the ID document

 

A company applicant is the natural person opening the business or registering it with the state. 

For entities like trusts, non-profits, and tribal businesses, specialized rules apply regarding identifying the beneficial owners.

When to Report? 

• For entities created or registered after January 1, 2024, initial reporting is due when applying for formation or registration.
• For entities formed before January 1, 2024, the first report is due no later than January 1, 2025.
• After initial reporting, filing updates within 30 days is required whenever beneficial ownership information changes.

How to Comply?

FinCEN provides both electronic and paper reporting options. We highly recommend utilizing the free electronic filing portal for a streamlined compliance experience. 

 

Our knowledgeable team can handle collecting all required data and filing complete and accurate beneficial ownership reports on your behalf. We will file through FinCEN’s portal to save you administrative hassles while ensuring compliance.

Why Report?

Promoting transparency between businesses and the government improves the detection and prevention of financial crimes. Access to verified beneficial ownership information will help:

 

• Stop the flow of illicit finance by identifying bad actors concealed behind shell companies
• Prevent fraud schemes designed to hide who truly benefits 
• Aid law enforcement investigations into entities engaged in money laundering, terror financing, trafficking, and other crimes
• Crack down on tax evasion through opaque corporate structures

 

By complying with the new reporting rules, your business contributes to the fight against high-risk illicit finance.

Let Us Help You Meet Requirements 

Staying on top of regulatory changes like beneficial ownership reporting is challenging amidst the demands of running your company. Our dedicated compliance team is here to guide you through this new process seamlessly.

 

Please reach out so we can:

 

• Verify if your particular entity needs to comply or qualifies for an exemption
• Collect all required identifying information on your company’s beneficial owners and applicants  
• File accurate and complete reports electronically well before the deadlines
• Update reports whenever beneficial ownership changes  

 

Complying with beneficial ownership reporting protects your company from penalties while promoting financial transparency. We look forward to helping ensure your business meets these regulatory requirements so you can stay focused on growth.