FinCEN Beneficial Ownership Information Reporting & Overview: Are MSBs Required to Report? Here’s What You Need to Know.

What is the rule?

The Beneficial Ownership Information (BOI) Reporting Rule establishes requirements for business entities—such as corporations or limited liability companies—who are created or registered in the U.S. to disclose information regarding their beneficial ownership to FinCEN.

Who must comply?

Generally, the rule applies to any domestic (registered in the U.S.) or foreign (incorporated abroad but registered to do business in any jurisdiction in the U.S.) company. A good rule of thumb is that the rule applies to any company who has filed a registration document with a state Secretary of State, Department of Corporations, or similar government agency.

Are there exemptions?

Yes – the rule follows the Corporate Transparency Act of 2020 and lists 23 types of entities which are exempt from reporting requirements, as they are already subject to substantial oversight at the federal or state level. Examples include banks, credit unions, insurance companies, any money services transmitting business and money services business (MSB) registered with FinCEN, and entities registered with the Securities and Exchange Commission.

What is a beneficial owner?

FinCEN defines a beneficial owner as any individual who (either directly or indirectly):

1. Exercises substantial control over a reporting company or
2. Owns or controls at least 25% of the company

How do businesses comply?

Reporting companies must identify themselves to FinCEN and report the following information for each of their beneficial owners:

1. Name
2. Date of Birth
3. Address
4. Photo ID information and a copy of the ID

Beneficial owners may also opt to provide this information directly to FinCEN. If they do so, they will be issued a “FinCEN identifier” which reporting companies may submit to FinCEN in lieu of submitting the required beneficial ownership for that individual.

FinCEN will continue to publish guidance and instructions on how reports are to be filed and on how businesses can comply between now and the effective date of the rule.

When must business be compliant?

The rule becomes effective on January 1st, 2024. Reporting companies will have one year to file their initial reports. Reporting companies created after the effective date will have to comply 30 days after their creation or registration.

Source: Federal Register 87-189

John Ashley (CIPP/US, CCRS, CRCMP) is a Senior Consultant in Bates Group's Money Services, Fintech and Digital Assets Compliance and AML Practice. He can be reached at jashley@batesgroup.com.

Bates Group's MSB, FinTech and Cryptocurrency team provides a full suite of Bank Secrecy Act, Anti-Money Laundering and Office of Foreign Assets Control (BSA/AML/OFAC) compliance consulting services, state money transmitter licensing acquisition and maintenance support, independent reviews, and corporate compliance training.

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