Beginning January 1, 2024, many companies in the United States will have to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury.
This new requirement is in response to the Corporate Transparency Act, enacted in 2021. This law created a beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures. A beneficial owner is any individual who, directly or indirectly, owns or controls at least 25% of the company.
Who Has to Report?
Companies may be required to report information about beneficial owners if the company is:
- A corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or
- A foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.
Who Does Not Have to Report?
There are 23 entity types exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies, nonprofits, and certain large operating companies. The list of entity types can be found on FinCEN's website.
How Do Companies Report?
Reporting companies will have to report beneficial ownership information electronically through FinCEN's website. The system will provide the filer with a confirmation of receipt once a completed report is filed with FinCEN.
When Do Companies Report?
Reports will be accepted starting on January 1, 2024. FinCEN cannot accept reports before this date.
- If a company was created or registered prior to January 1, 2024, it will have until January 1, 2025 to report beneficial ownership information.
- If a company is created or registered on or after January 1, 2024, it must report beneficial ownership information.
For more information on the new Beneficial Ownership Information Reporting Requirement, visit FinCEN’s website.