FinCEN Reports: STAY OF ENFORCEMENT ISSUED

IMPORTANT: READ THIS UPDATE 12/19/24:

FINCEN REPORTS NOT DUE BECAUSE OF FEDERAL COURT INJUNCTION

Summary of FinCEN

Starting in 2024, most small businesses created in or registered to do business in the United States will be required to report information about their beneficial owners — the individuals who ultimately own or control a company — to “FinCEN”. FinCEN is a division of the U.S. Department of the Treasury. The requirements become effective on January 1, 2024, and companies will be able to begin reporting beneficial ownership information to FinCEN at that time.

Summarily, the reporting requirements will apply to most small businesses including corporations and limited liability companies.

I recommend that you docket the reporting dates for your business so that you can timely file the report, and avoid any potential penalties that may be imposed for late filing. Reporting deadlines can be found in the document linked below.

The purpose of the reporting is to “better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity” by creating a federal framework for reporting, storing, and disclosing beneficial ownership information of “reporting companies.”

Exemptions from the reporting requirements, of which there are many, include companies with more than 20 full-time employees and with gross US revenue over $5MM.

What Entities Have to Report

Reporting companies will be required to deliver to FinCEN a report containing the following information about the reporting company:

Entity’s full legal name
Trade names
A complete current address
The jurisdiction it was formed in or jurisdiction in which a foreign company first registers
Internal Revenue Service Taxpayer Identification Number and Employer Identification Number

Reporting companies must also furnish the following information to FinCEN about each beneficial owner and company applicant of the reporting company:

Full legal name
Date of birth
Current business or residential address

A unique identifying number from an acceptable identification document (i.e., passport, driver’s license, etc.) or FinCEN identifier

The Act defines “beneficial owner” as an individual, who directly or indirectly, exercises substantial control over the reporting company or owns or controls at least 25 percent of the ownership interests of the reporting company. An individual exercises “substantial control” over an entity if the individual 1) serves as a senior officer, 2) has authority over the appointment or removal of a senior officer or a majority of the board of directors, or 3) directs, determines, or has substantial influence over important business decisions.

Good luck!