The Corporate Transparency Act (“CTA”) was enacted in 2021 as part of the Anti-Money Laundering Act of 2020, requiring certain business entities (“Reporting Companies”) to report beneficial ownership information (“BOI”), and, for entities created or registered on or after January 1, 2024, information with respect to any individual who directly files the document creating the Reporting Company (“Company Applicant”), to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”). McGuireWoods described the CTA’s requirements in a previous post.
On November 7, 2023, FinCEN announced a final rule amending its beneficial ownership information (“BOI”) reporting requirements addressing the circumstances under which Reporting Companies may use an entity’s FinCEN Identifier instead of reporting the BOI of individuals owners of that entity.
Addressing how FinCEN identifiers may benefit the industry in complying with these new reporting requirements, FinCEN noted in its release: “A FinCEN identifier is a unique number that FinCEN will issue upon request after receiving required information. Although there is no requirement to obtain a FinCEN identifier, doing so can simplify the reporting process and allows entities or individuals to provide the required identifying information directly to FinCEN.” Reporting Companies may report the FinCEN Identifier of the individual in lieu of supplying that individual’s otherwise required personal information on a BOI report.
Under the newly amended rule, Reporting Companies may report another entity’s FinCEN identifier and full legal name in lieu of other BOI specified under the rule, but only if:
- The other entity has obtained a FinCEN identifier and provides that FinCEN identifier to the Reporting Company;
- An individual is or may be a Beneficial Owner of the Reporting Company that the individual holds through an ownership interest in the other entity; and
- The Beneficial Owners of the other entity and of the Reporting Company are the same individuals.
On or after January 1, 2024, individuals who are Beneficial Owners or Company Applicants can, upon request via an electronic web form, receive a FinCEN Identifier from FinCEN.
Entities with reporting obligations should carefully review these requirements before they go into effect on January 1, 2024.
As a reminder, Reporting Companies created or registered prior to January 1, 2024, must report beneficial ownership information by January 1, 2025. Reporting Companies created or registered on or after January 1, 2024, will have 30 days after receiving notice of their company’s creation or registration to file their initial BOI reports.
For questions about these rules, the CTA, or customer due diligence and beneficial ownership rules more generally, contact the authors of this article or another member of the McGuireWoods Government Investigations and White Collar team, Financial Services Litigation team, Tax & Employment Benefits team, or the Corporate & Private Equity team.