Do You Know About Beneficial Ownership Information (BOI) Reporting For Your Business?

The Corporate Transparency Act (CTA), enacted in January 2021, represents a significant shift in U.S. anti-money laundering efforts by requiring certain small businesses to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).

The CTA mandates that certain small businesses file BOI reports with FinCEN, disclosing detailed information about their beneficial owners. Beneficial owners are individuals who directly or indirectly own or control 25% or more of the ownership interests in the business. The goal of BOI reporting is to enhance transparency and combat illicit financial activities, such as money laundering and terrorism financing.

Types of Businesses Exempt from BOI Reporting: 

1. Publicly traded companies listed on U.S. stock exchanges.
2. Entities with substantial reporting obligations under existing federal regulations, such as SEC-registered companies.
3. Nonprofit organizations and entities already subject to extensive reporting requirements under other federal laws.

Types of Businesses Required to File BOI Reports: 

1. Corporations, limited liability companies (LLCs), partnerships, and other similar entities formed or registered in the United States.
2. Entities with fewer than 20 employees and annual gross receipts or sales of less than $5 million.
3. Entities engaged in activities that are deemed to pose a higher risk of money laundering or terrorism financing, as determined by FinCEN.

Penalties for Non-Compliance: Failure to file a BOI report or providing false or misleading information can result in significant penalties for small business owners. Penalties may include civil fines of up to $500 per day for non-compliance and criminal penalties of up to $10,000 and/or imprisonment for up to two years.