Is Your Bank Ready for the New BOI Reporting Rules?

By: Jennifer Valentine

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A quick reminder that the new Beneficial Ownership Reporting Guidelines are coming into effect in January 2024! 

In 2022, the Financial Crimes Enforcement Network (FinCEN) issued a final rule implementing the Corporate Transparency Act (CTA) which focuses on beneficial ownership information (BOI) reporting. 

The rule is designed to enhance national security and the integrity of the U.S. financial system by providing essential information to law enforcement agencies, state and local officials, tribal authorities, and financial institutions. It aims to prevent various illicit actors, including drug traffickers, fraudsters, and corrupt individuals, from using shell companies to launder or hide their money and assets in the United States. 

The rule goes into effect on January 1, 2024, with reporting deadlines and provisions for existing and new reporting companies. It is particularly important in addressing the misuse of corporate structures, such as shell and front companies, which can be exploited by criminals to obscure their identities and engage in illegal financial activities. 

Recent geopolitical events, such as the war in Ukraine, underscore the need to combat the use of shell companies by foreign entities attempting to evade sanctions. The rule aims to strengthen national security and transparency while minimizing the burden on small businesses and reporting companies. This helps ensure a level playing field for honest businesses and combating illicit financial activities facilitated by opaque legal structures like shell companies.

The rule requires reporting companies to file BOI reports with FinCEN, identifying beneficial owners and company applicants. Beneficial owners are individuals with significant control over or ownership interests in reporting companies, and the rule outlines the criteria for determining substantial control and ownership interests. The reporting must include personal information, such as names, birthdates, addresses, and unique identification numbers. The rule will have various timelines for reporting companies to file initial and updated reports. 

To learn more about Beneficial Ownership Reporting, watch this Video Overview.