FinCEN Beneficial Ownership Update
October 10, 2023
The Financial Crimes Enforcement Network (FinCEN) is proposing to extend the deadline for certain reporting companies to file their initial beneficial ownership information (BOI) reports. FinCEN also released a small entity compliance guide.
Why it matters: The Corporate Transparency Act requires certain small legal entities to report their natural person beneficial ownership information to a federal database. The proposed extension will provide reporting companies created or registered in 2024 with additional time to understand their regulatory obligations and obtain the required information.
- Reporting companies created or registered before January 1, 2024, have until January 1, 2025, to file their initial BOI reports with FinCEN.
- Entities created or registered on or after January 1, 2025, have 30 days to file their initial BOI reports.
- Financial institutions had hoped the database would streamline BOI collection and reporting, which banks are already required to do for their legal entity customers. But delays in the rulemaking have dimmed those hopes.
What they’re saying: Businesses have been concerned they will be unable to meet the initial requirements since FinCEN finalized the reporting rule in September 2022. Moreover, FinCEN has yet to complete rulemakings on BOI database access and updates to bank customer due diligence rules.
The bottom line: FinCEN's proposed deadline extension aims to increase compliance, reduce burdens on reporting companies, and promote the creation of a highly useful database for BOI. The extension is also in response to congressional concerns about the BOI rulemaking process.
Contact Sairah Burki (sburki@crefc.org) and David McCarthy (dmccarthy@crefc.org) with questions.