The BOI Report: A new step towards business transparency
January 1, 2024 marked the beginning of a new era in corporate transparency in the United States. The Financial Crimes Enforcement Network (FinCEN) began accepting Beneficial Ownership Information (BOI) Reports, a crucial step in the fight against illicit activities in the business world.
What is the BOI Report?
The BOI Report (Beneficial Ownership Information Report) is a mandatory document for many companies operating in the United States, its main objective is to identify the individuals who own or benefit from a business entity, either directly or indirectly.
This report is submitted only once to the competent authorities. However, it is important to note that if there are changes to the information originally provided, the document will need to be updated to accurately reflect the new ownership or benefit situation.
Key information:
Companies in existence before January 1, 2024 have until January 1, 2025 to submit their initial report.
New companies created in 2024 must submit the report within 30 days of receiving notification that their creation or registration has come into effect.
Penalties for noncompliance can be severe, including fines from $500 to $10,000 per day and prison terms of up to two years.
This new requirement seeks to prevent money laundering, fraud and other illicit activities.
Which entities must submit beneficial ownership information to FinCEN?
Entities that are required to file the BOI report are officially known as “reporting companies.” Among the organizations that must comply with this requirement are:
Corporations, limited liability companies (LLC), or any other entity created in the US by filing a document with a secretary of state or similar office under the law of a state.
Foreign companies that have registered to do business in any US state by submitting official documents.
However, it is important to note that there are 23 types of entities exempt from the requirement to report beneficial ownership information, these exemptions include:
Publicly traded companies that meet specific requirements.
Many non-profit organizations.
Some large operating companies.
Banks, credit unions, and other regulated financial institutions.
Insurance companies.
Government entities.
It is essential that each company carefully review the qualification criteria before concluding whether it is exempt or not. FinCEN's Compliance Guide for Small Entities provides detailed information and a flowchart to help identify whether a company is a filer, which can be found at the following link https://www.fincen.gov/sites/default/files/shared /BOI-FAQs-Q%26A-09.28.23-Spanish-508C.pdf
The BOI Report represents significant progress in the fight against corporate opacity and promises to change the landscape of financial integrity in the United States. Companies must be attentive to these new requirements to ensure compliance and contribute to a more transparent business environment.
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