Understanding Beneficial Ownership Information Reports
- Overview of the Corporate Transparency Act
- The Importance of Beneficial Ownership Information Reporting for Businesses
- What Entities Must File Beneficial Ownership Information Reports?
- Exemptions to the Beneficial Ownership Information Reporting Requirements
- What to Do If You Have to File a Beneficial Ownership Information Report
- Who is a Beneficial Owner Under the Corporate Transparency Act?
- The Beneficial Owner Exceptions Under the Corporate Transparency Act
- Who is a Company Applicant Under the Corporate Transparency Act?
- The High Stakes of Transparency: Navigating Beneficial Ownership Information Reporting Penalties
- FinCEN Identifier: A Simplified Compliance Tool
- Beneficial Ownership Information Reporting: Updates and Corrections
FinCEN Identifier: A Simplified Compliance Tool
Beginning in 2024, millions of U.S. entities will need to file beneficial ownership information reports. These reports are subject to complicated rules. Recognizing the burdens this new reporting regime imposes, the Corporate Transparency Act created a process to simplify reporting—the FinCEN identifier.
What is the FinCEN Identifier?
The FinCEN identifier is a unique number assigned to reporting companies who file their beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN). The FinCEN identifier is not generated automatically; reporting companies must request it when they submit their beneficial ownership information reports. The FinCEN identifier helps to streamline updated or corrected beneficial ownership information reports. As a consistent reference for subsequent filings, the FinCEN identifier reduces the repetitive submission of data.
Individual Application Process for Beneficial Owners and Company Applicants
Not just for reporting companies, beneficial owners and company applicants can also individually apply for FinCEN identifiers. Once obtained, this identifier can be shared with the reporting company to be used in lieu of detailed personal information typically required in beneficial ownership information reports. The application process is straightforward: individuals must access the Beneficial Ownership Secure System (BOSS) and select the ‘Create a FinCEN ID (optional)’ option. Applicants must include the same information as would have to be provided on a beneficial ownership information report: full legal name, date of birth, residential address, a unique identifying number from an acceptable identification document, and an image of that identification document. After submitting that information, FinCEN will provide the applicant’s unique FinCEN identifier.
Protecting Personal Information
The FinCEN identifier serves a dual purpose: streamlining compliance and securing privacy. With a singular, reusable identifier, there is less need to distribute sensitive information repeatedly. For individuals involved with multiple entities, this is advantageous, as it allows for a single identifier to be employed across various reports and filings, enhancing both security and convenience.
The Ongoing Obligation to Update Beneficial Ownership Information
A reporting company is obligated to update a beneficial ownership information report within 30 days after a change to any beneficial ownership information. A reporting company is also obligated to correct a beneficial ownership information report within 30 days of discovering that there is incorrect information on a previously-filed beneficial ownership report. When an individual beneficial owner obtains a FinCEN identifier, the reporting company can use that identifier instead of providing the required beneficial ownership information. But by obtaining a FinCEN identifier, the individual rather than the reporting company becomes responsible for updating or correcting that owner’s beneficial ownership information. The individual must update or correct any information previously submitted to FinCEN in the application for the FinCEN identifier within 30 days after the date on which any change occurs or error is discovered.
Remember, the required information about a beneficial owner on a beneficial ownership report includes the beneficial owner’s full legal name, date of birth, residential address, a unique identifying number from an acceptable identification document, and an image of that identification document. If any of those items change, the beneficial owner who obtained the FinCEN identifier is responsible for updating that information. Similarly, if any of those items were entered incorrectly on the application for the FinCEN identifier, the beneficial owner must make a correction.
Electronic Submission Through BOSS
Obtaining a FinCEN identifier must be done electronically via FinCEN’s secure filing system, BOSS. This is FinCEN’s electronic filing system implemented to collect and maintain beneficial ownership information. A reporting company can obtain a FinCEN identifier while electronically filing a beneficial ownership information report through BOSS. And the BOSS system allows individuals to apply for and receive a FinCEN Identifier that they can supply to the reporting companies with which they have filing obligations – whether that is as a beneficial owner or a company applicant.
Kim & Rosado LLP: Your Compliance Partners
At Kim & Rosado LLP, our experienced partners are equipped to help you understand these new procedures and integrate them into your existing compliance framework. For assistance in obtaining your FinCEN identifier or for any questions about the BOI reporting process, please reach out to us. We are here to provide the guidance you need.