We've been trying to keep clients apprised of the changing landscape and legal requirements of the new "BOI" reporting required by the Financial Crimes Enforcement Network of the US Treasury Department.
Here are the basics to know before trying to figure out the latest news regarding whether or not this entire system is constitutional.
#1 - What is the FinCEN BOI? The United States Government, Department of Treasury Financial Crimes Enforcement Network (FinCEN) is attempting to determine who owns which small legal entities throughout the entire country. This effort is required by the Corporate Transparency Act (CTA) which was promulgated as part the larger National Defense Authorization Act of 2020 (NDAA). Congress passed the NDAA and overrode then-President Trump's veto of the act in January of 2021 with an effective date of January 1, 2024. The Corporate Transparency Act requires virtually all small entities (each defined as a “reporting company”) to file, in the absence of an exemption, information on their “beneficial owners” with the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of Treasury (“Treasury”). (The stated rationale for the law is to reduce foreign money laundering, although it is difficult for some of us to understand how a database of people and small entities will assist in this endeavor or why they would exclude the large enterprises which undoubtedly are responsible for the vast majority of money-laundering activity. There is no record as to why or how a HOA, for example, would be laundering foreign funds, but the fact that nobody really "owns" an HOA does not exempt them from the requirement to name their beneficial owners and to provide driver's licenses or passports for all beneficial owners with harsh penalties for failing to do so). The private "ownership" information is not supposed to be publicly available, but FinCEN will disclose filed information to U.S. federal law enforcement agencies, prosecutors, judges and other enforcement agencies and to financial institutions and their regulators.
#2 - Where is the BOI Filed? https://fincen.gov/boi
#3 - What information is required? See the FAQs. https://fincen.gov/boi-faqs#B_1
#4 - When is it due? For entities filed in 2025, within 30 days of formation. For older entities, the BOI was due by 1/1/2025. However, there is pending litigation which has delayed the deadlines, and we do not know how this will be resolved.
#5 - What are the penalties for noncompliance? As specified in the Corporate Transparency Act, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. However, this civil penalty amount is adjusted annually for inflation. As of the time of publication of this FAQ, this amount is $591. A person who willfully violates the BOI reporting requirements may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.
