FinCEN Releases Small Entity Compliance Guide

Recently, FinCEN released the Small Entity Compliance Guide (Guide), which details how entities comply with the Beneficial Ownership Information Reporting Rule (BOI Rule).  The BOI Rule, issued on September 29, 2022, as part of the implementation of the Corporate Transparency Act, is intended to make it harder for illicit activity, such as money laundering, drug trafficking, and fraud, to occur in the U.S. through shell and front companies.

The BOI Rule requires that certain entities report information to FinCEN on, (1) beneficial owners, and (2) for some entities, company applicants.  While the Guide describes in depth and should be reviewed closely for who qualifies as a “reporting company,” and which individuals qualify as reportable based on their beneficial ownership or actions as a company applicant, the Guide states that “in general, a beneficial owner is an individual who owns or controls at least 25 percent of a company or has substantial control over the company, and a company applicant is an individual who directly files or is primarily responsible for the filing of the document that creates or registers the company.” (emphasis added).

The Guide also explains what information must be included in the report and the filing deadlines.  Companies can begin to file these reports on January 1, 2024.  Companies that existed prior to January 1, 2024, have until January 1, 2025, to file the report.  Companies that are created on or after January 1, 2024, must file the report within 30 calendar days of actual or public notice of the company’s creation.

The FInCEN release stated that FinCEN will provide guidance on how to submit these reports soon.