On Jan. 1, 2024, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) began accepting beneficial ownership reports (BOI Report) required to be filed under the Corporate Transparency Act (CTA). Under the CTA, entities meeting the definition of a “reporting company” that do not qualify for an exemption are required to file a BOI Report with FinCEN.
Generally, in a BOI Report, a reporting company must submit certain information about itself, such as its name(s), tradename(s), address, jurisdiction of organization, and tax identification number. In addition, reporting companies must provide the following personal information (the “Personal Information”) about each of its beneficial owners – that is, individuals who ultimately own or control them – and, if the entity is formed after Jan. 1, 2024, each of its company applicants – that is, individuals involved in forming the company:
- Date of birth;
- Address; and
- The identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a state (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.
Instead of disclosing Personal Information to a reporting company for inclusion in its BOI Report, a beneficial owner or company applicant has the option to acquire a FinCEN Identifier (FinCEN ID). This unique identifier, issued by FinCEN upon request, is obtained by providing the required Personal Information directly to FinCEN. While not obligatory, obtaining a FinCEN ID streamlines the reporting process, sparing beneficial owners and company applicants from sharing Personal Information with the reporting company and sparing the reporting company from having to implement security protocols to protect such Personal Information from unauthorized disclosure. This safeguarding of Personal Information underscores the strong recommendation for all beneficial owners and company applicants to register with FinCEN to secure a FinCEN ID.
Moreover, acquiring a FinCEN ID eliminates reporting companies from having to file updated BOI Reports when the Personal Information of a beneficial owner changes. Under the CTA, when information reported in a BOI Report previously filed with FinCEN changes – for example, if there’s a change in a beneficial owner’s name, address, driver’s license number, or passport number – the individual must report the change to the reporting company, and the reporting company must file an updated BOI Report making the change. This change must be reported within 30 days, and the reporting company must file an updated BOI report to record this change within the same time frame. By obtaining a FinCEN ID, if there is a change in Personal Information of a beneficial owner, rather than reporting the change to the reporting company, the beneficial owner must only update the Personal Information directly with FinCEN, but because the individual’s FinCEN ID does not change, the reporting company is not required to file an updated BOI Report.
A FinCEN ID can be obtained easily and at no cost. Click here for step-by-step instructions for obtaining a FinCEN ID.