On July 26, 2024, the Financial Crimes Enforcement Network (FinCEN) issued guidance to customers of financial institutions about reporting beneficial ownership information (BOI). The guidance notes that many small businesses will have to report BOI to FinCEN pursuant to the Corporate Transparency Act (CTA) and will also have to provide BOI to their financial institutions pursuant to a separate federal requirement. The guidance also details some of the differences in the BOI that must be reported to FinCEN and the BOI that is collected by financial institutions.
Below are some of the key points from the guidance:
- An entity may potentially have to provide BOI to both FinCEN and a financial institution. For example, if an entity seeks to open a bank account, the bank may be required to request certain information about the entity’s beneficial owner(s) before the account can be opened. That information is collected by the bank when fulfilling its Federal customer due diligence obligations. That same entity may separately be a “reporting company” under the CTA that is required to report BOI to FinCEN.
- If an entity is required to report BOI to FinCEN, that requirement cannot be fulfilled by providing BOI to a financial institution.
- FinCEN and financial institutions do not collect the exact same types of BOI. For example, financial institutions are required to collect social security numbers of beneficial owners, but social security numbers are not required to be reported to FinCEN. Company applicant information is required to be reported to FinCEN (for reporting companies created or registered in 2024 or beyond) as well as all dba names used by the company, while financial institutions are not required to collect that information.
- There are some differences in how a “beneficial owner” is defined for the purposes of FinCEN reporting and financial institution collection, although both have a “control prong” and an “ownership prong”.
- There is no maximum number of beneficial owners who must be reported to FinCEN. However, under the “control prong,” a financial institution is only required to collect information about one individual. Under the “ownership prong,” a financial institution may be required to collect information for up to four individuals.
FinCEN also points out that the CTA requires FinCEN to revise its customer due diligence requirements. Therefore, the information in this guidance is accurate as of July 2024 and is subject to change in the future. FinCEN’ Notice to Customers: Beneficial Ownership Information Reference Guide can be accessed here: https://www.fincen.gov/sites/default/files/shared/BOI-Notice-to-Customers-508FINAL.pdf
