There is a new rule effective January 1, 2024, that could impact you if you are a business owner. See below for the details.
The U.S. Department of the Treasury's Financial Crimes Enforcement Network, commonly known as FinCEN, plays a crucial role in combating money laundering, terrorist financing, and other illicit financial activities. As the primary regulator and administrator of the Bank Secrecy Act (BSA), FinCEN works to ensure the integrity and stability of the U.S. financial system.
One of FinCEN's recent initiatives is the issuance of a new rule on Beneficial Ownership Information (BOI) Reporting. This rule will become effective on January 1, 2024, and requires certain business entities, such as corporations, limited liability companies (LLCs), and partnerships, to disclose the true individuals who own or control them.
We’ve compiled some tips and resources to help small business owners prepare for this new rule.
Beneficial Ownership Information (BOI) and Its Importance
Beneficial Ownership Information, or BOI, refers to the true individuals who own or control a business entity. It goes beyond just the names of the shareholders or partners listed on official documents.
By knowing the individuals behind a business, authorities can better trace the flow of funds and identify potential risks. It enhances transparency in the financial system and closes loopholes that criminals exploit.
BOI reporting also benefits legitimate businesses. It provides a level playing field, ensuring fair competition by preventing illicit players from gaining an unfair advantage. Additionally, it strengthens a company's reputation and trustworthiness in the eyes of stakeholders, investors, and customers.
Detailed Breakdown of the New BOI Reporting Rule
To effectively navigate this new rule, it is important to understand the key details and requirements. A guide is now available on FinCEN’s beneficial ownership information reporting webpage. Additional resources include:
The information to be collected includes the individual's full legal name, date of birth, residential address, and unique identifying number, such as a driver's license or passport number.
Suggestions for how to Effectively prepare for FinCEN’s New BOI Reporting Requirements
Be prepared for January 1, 2024:
- Educate Yourself: Visit FinCEN’s BOI website to start familiarizing yourself with the new rule and understanding its implications for your business. Take the time to read the guidance (above) provided by the U.S. Department of the Treasury's Financial Crimes Enforcement Network and seek clarification if needed.
- Prepare to Report BOI to FinCEN: Familiarize yourself with the process of reporting BOI to FinCEN. Ensure that you understand the requirements and filing process. Be mindful of the specified reporting timeframe so you can be prepared to submit the information in a timely manner.
. Maintain Documentation and Audit Trails: FinCEN cannot accept reports before January 1, 2024. When it’s time to submit your reports, be sure to keep detailed documentation of your BOI reporting activities, including evidence of submitted reports. These records will be valuable in case of audits or investigations.
Potential Consequences for Non-Compliance with the New BOI Reporting Rule
Non-compliance with the U.S. Department of the Treasury's Financial Crimes Enforcement Network’s BOI reporting rule can have significant consequences. First and foremost, non-compliance can result in monetary penalties. FinCEN has the authority to impose fines on entities that fail to meet the BOI reporting requirements. Non-compliance may also trigger legal consequences and reputational damage.
Be On the Lookout for Scams
FinCEN has been notified of recent fraudulent attempts to solicit information from individuals and entities in connection with the new BOI reporting rule. These scams typically involve phishing emails or letters claiming to be from FinCEN, requesting the recipient to click on a URL or scan a QR code.
To protect yourself, be skeptical of all unsolicited communications claiming to be from FinCEN or other government agencies. Verify the legitimacy of the communication by contacting the agency directly through their official channels.
Complying with BOI Reporting Requirements
If navigating the BOI reporting requirements seems overwhelming, consider seeking professional assistance from legal counsel, an accounting firm, a financial advisor, or a compliance expert who specializes in financial regulations. They can provide guidance, review your processes, and ensure that your business remains compliant.
You may contact FinCEN with questions about the BOI reporting requirements at this webpage.
Please note this article has been written for educational purposes and all communications/reporting requirements must be submitted directly through FinCEN, not Lakeland Bank.
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