In the wake of increasing concerns about illicit financial activities and money laundering, the Financial Crimes Enforcement Network (FinCEN) implemented the Beneficial Ownership Information (BOI) reporting rule in compliance with the Corporate Transparency Act (CTA) of 2021. The primary objective behind this new regulation is to bolster the capacity of FinCEN and other pertinent agencies to safeguard U.S. national security and the integrity of the U.S. financial system from illicit exploitation.
Effective January 1, 2024, numerous privately held U.S. entities as well as foreign entities registered to conduct business within the United States are mandated to file a report with FinCEN. This report requires the identification and provision of personal information pertaining to various entities and individuals. Specifically, the report must outline details concerning the entity itself, every individual who directly or indirectly wields “substantial control” over the entity, or possesses at least 25 percent of the ownership interests in the entity on a fully consolidated basis (referred to as a “beneficial owner”), and certain individuals associated with the filing of documents establishing the entity with relevant state or tribal authorities (referred to as the “company applicant”).
The rationale behind this regulatory measure is to curb illicit actors from leveraging corporate structures such as shell and front companies to cloak their identities and launder their ill-gotten gains through the United States. By doing so, the rule endeavors to fortify the integrity of the U.S. financial system, making it increasingly arduous for illicit entities to utilize shell companies as conduits for money laundering or asset concealment.
FinCEN has been actively accepting reports in adherence to this regulatory framework. Notably, it is projected that the cost for reporting companies, particularly those with straightforward management and ownership structures — which are anticipated to constitute the majority of reporting companies — will amount to approximately $85 per report for the preparation and submission of an initial BOI report.
Businesses carrying out their obligation of BOI reporting to FinCEN can benefit from professional assistance. An experienced commercial lawyer with regulatory experience can extend comprehensive services that include:
- Assessment and identification — Determining which entities and individuals need to do BOI reporting
- Exemption analysis — Identifying potential exemptions to streamline compliance
- Report preparation and filing — Ensuring accurate and timely submission of BOI reports using FinCEN’s E-Filing System.
H. Clay Parker, Esq. advises Central Florida clients on all types of commercial law issues, including federal and state regulatory compliance. Please call 407-216-2504 or contact us online to schedule an appointment at our Orlando office.
