TRANSCRIPT
Greg Corombos: Hi, I'm Greg Corombos, our guest in this edition of Expert Insights is Ani John, Associate Director of Product Management at CT Corporation, a Wolters Kluwer company. This is one in a series of podcasts focusing on the Corporate Transparency Act. With the CTA now in effect, existing and new businesses that meet certain criteria are required to comply with the law’s beneficial ownership information reporting rule. They must submit information to the Treasury Department's Financial Crimes Enforcement Network, or FinCEN, about the company and its beneficial owners. A beneficial owner is an individual who exercises substantial control over the company, or who owns or has control over at least 25% of its ownership interests. FinCEN estimates about 32 million businesses will need to comply. During today's podcast, Ani will share information about CT Corporation’s award winning solution to help businesses meet the CTAs compliance requirements. And Ani, welcome to Expert insights. Thanks so much for being with us today.
Anirudh John: Thanks for having me, Greg.
Greg Corombos: Well, let's start with some of the basics here with complying with the CTA. And that's what companies need to report. What do we need to know there?
Anirudh John: Let's start with the purpose of the Corporate Transparency Act. At a high level, the purpose of this act was to protect national security. And until the beginning of this year, you could create any LLC or corp without reporting on its ownership. Therefore, all these years, illicit actors have taken advantage of this and created shell entities to engage in money laundering, drug trafficking, and other misconduct. This act changes all that. It requires transparency of ownership. Therefore, any LLC (or limited liability company), corporations, or any entity which was created by the filing of a document with the Secretary of State or similar office is required to report unless they qualify for an exemption.
Greg Corombos: Now that we know who needs to report, what are the timelines?
Anirudh John: When it comes to timelines, we have to look at the two types of reporting entities. That's the term FinCEN uses for entities that qualify. There are the existing entities. That's basically the ones that were created before Jan. 1, 2024. And they will have until Jan. 1, 2025, to report. And then there are new entities. That’s any entity created after Jan. 1, 2024. And they only have 90 days from the date they would have stood as a business.
Greg Corombos: That's a pretty short deadline. So they need to make sure they're in compliance here. So the next logical question here, Ani, is what information needs to be reported?
Anirudh John: So the information needed on the report is of two types, entity information and personal information. The entity information is basic information, like the address information, tax ID number, place information, things like that. And then there is the personal information. That refers to the information about the owners, which is actually the whole point of this report. And that information includes details like the full legal name of the individual address information, and most importantly, a copy of an ID like a US or foreign passport or a driver's license. So that means if you were listed as a beneficial owner for a company, then not only your personal information, but an actual copy of your passport or driver's license would be required on this report.
Greg Corombos: Well, that's certainly interesting. Is there a way that a beneficial owner can opt out of providing personal information on the report?
Anirudh John: There is a way, Greg. FinCEN has provided the option to acquire a FinCEN ID. And you can acquire this directly from the FinCEN website. You can use this ID on the report instead of providing your personal information. But to acquire this ID you actually have to provide your personal information. So, either way, FinCEN will have your personal information if you are a beneficial owner.
Greg Corombos: Okay, so there's a lot of compliance happening for the first time obviously with this law. Tell me how CT is helping businesses do that and comply.
Anirudh John: Over the last year, maybe more, we have hosted dozens of webinars and provided customers and the general public with information about the act itself. In addition to this, we also designed a self assessment quiz that anybody can take, which will help you determine if you qualify the report. And most importantly, we built a platform that is designed to allow anybody to file a BOI report directly to FinCEN.
Greg Corombos: Amazing, amazing. So explain how CT’s BOI platform works.
Anirudh John: So, the main theme of our platform is simplicity. I don't know about you, Greg, but I am always intimidated by filing anything with the government because there's always the fear of missing some important detail and then facing a penalty for it. Our platform addresses this fear. We have created a simple filing experience, which will remove the need for you to read the instructions provided by FinCEN. So as long as you haven't intentionally provided false information, our platform will ensure that you file a report that is acceptable by FinCEN.
Greg Corombos: Meeting compliance obligations, though, can be cumbersome, Ani. So how long does the process take?
Anirudh John: It certainly can, Greg. In fact, last year, FinCEN stated that the entire process should take between two to three hours, which is a long time. But the cool thing about technology is you can take cumbersome processes like this and make them much simpler. If you take the example of an entity that, let's say, has two to three owners, it would take you about three to five minutes to fill out all the information on our platform and submit the report directly to FinCEN. On a good day, it will take you less than two minutes to get the evidence back from FinCEN. So overall, about seven to eight minutes to go from out of compliance to compliance. That's a whole lot faster than three hours if my math is correct,
Greg Corombos: I think it is. You're definitely right, it's a lot faster. How do businesses know that their information was submitted properly?
Anirudh John: Once you submit your information to FinCEN, you'll receive an evidence document back. If the report was acceptable by FinCEN, then you get a notification saying that the filing was successful. If the report was rejected, then you will get a notice saying your filing was rejected. But let's say if your report was rejected for some reason, our platform will give you the reason and suggest next steps to make sure your information is resubmitted correctly.
Greg Corombos: Ani, a lot of businesses turn to their attorneys or accountants as trusted resources. Can those services use the platform to file for their many different clients? And if they do, will they need a separate subscription for each client?
Anirudh John: You're absolutely right. A lot of businesses will turn to their CPAs and law firms to file these reports, Greg. The good news is if you use our platform, and you are a law firm or a CPA or any third party, you only need to buy the subscription once. In addition, since these third parties will have dozens or hundreds of clients, we have taken security measures to ensure the information stays confidential and cannot be shared between clients.
Greg Corombos: Well, Ani, congratulations are in order because it was recently announced that CT’s beneficial ownership platform won the 2024 FinTech Breakthrough Award in the fraud prevention and innovation category. Tell us what makes this tool a top choice in the market.
Anirudh John: I personally think that when you're dealing with forms that not only contain personal information, but also have severe penalties for noncompliance, you need to use a brand that has experience with handling sensitive data. CT has over 130 years of market leadership and providing legal compliance services and are experts and dedicated to researching [and] analyzing filing requirements across federal, state, and local governments. Also, recently, there were instances of fraudulent attempts to obtain PII in connection to BOI reporting. Therefore, it would be logical in this case to choose a recognized service vendor with experience and compliance solutions just to make sure your data is safe.
Greg Corombos: Do you need to be a CT client to use the platform?
Anirudh John: So, yes. Registration is required before submitting reports to the platform. This is to ensure the information you enter is secure. But it's a quick and painless process.
Greg Corombos: Well, Ani, you’ve certainly given our listeners and me a lot to think about here. Any final thoughts about what businesses need to consider as they look to submit the necessary information to FinCEN?
Anirudh John: Sure, Greg. I would leave the listeners with three points of recommendation. First is [to] take some time. Identify if your company is eligible to report. You can use the quiz that's available on our website. It's free. Even after you do this, and you're still not sure if you're eligible, I would say go ahead and file a BOI report because there are no penalties for non-eligible entities [to file a] report. The second is to carefully assess and identify all the information you need. That is, determine who the beneficial owners are and collect the information ahead of time. And the final point is [to] be mindful about the deadlines. Given the nature of the penalties that FinCEN plans to impose, it will be advisable to find your reports ahead of time.
Greg Corombos: Well, Ani, I know that CT has received a lot of questions about how to comply with the CTA, and I know that you've also provided many of the answers to those questions today, so we truly appreciate it. Thank you so much for your time and for sharing your expertise.
Anirudh John: Thank you so much. Greg
Greg Corombos: Ani John is Associate Director of Product Management at CT Corporation, a Wolters Kluwer company. I'm Greg Corombos reporting for Expert Insights. For more information on this subject, please visit ctcorporation.com.
