Category D. Beneficial Owner
Q. Who is a beneficial owner of a reporting company?
A. A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of a reporting company’s ownership interests. Because beneficial owners must be individuals (i.e., natural persons), trusts, corporations, or other legal entities are not considered to be beneficial owners. However, in specific circumstances, information about an entity may be reported in lieu of information about a beneficial owner.
Q. Who is the beneficial owner of a homeowners association?
A. A homeowners association (HOA) that meets the reporting company definition and does not qualify for any exemptions must report its beneficial owner(s). A beneficial owner is any individual who, directly or indirectly, exercises substantial control over a reporting company, or owns or controls at least 25 percent of the ownership interests of a reporting company.
There may be instances in which no individuals own or control at least 25 percent of the ownership interests of an HOA that is a reporting company. However, FinCEN expects that at least one individual exercises substantial control over each reporting company. Individuals who meet one of the following criteria are considered to exercise substantial control over the HOA:
- the individual is a senior officer;
- the individual has authority to appoint or remove certain officers or a majority of directors of the HOA;
- the individual is an important decision-maker; or
- the individual has any other form of substantial control over the HOA.
Q. Can beneficial owners own or control reporting companies through trusts?
A. Yes, beneficial owners can own or control a reporting company through trusts. They can do so by either exercising substantial control over a reporting company through a trust arrangement or by owning or controlling the ownership interests of a reporting company that are held in a trust.
Q. Who are a reporting company’s beneficial owners when individuals own or control the company through a trust?
A. A beneficial owner is any individual who either: (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of a reporting company’s ownership interests. Exercising substantial control or owning or controlling ownership interests may be direct or indirect, including through any contract, arrangement, understanding, relationship, or otherwise.
Trust arrangements vary. Particular facts and circumstances determine whether specific trustees, beneficiaries, grantors, settlors, and other individuals with roles in a particular trust are beneficial owners of a reporting company whose ownership interests are held through that trust.
For instance, the trustee of a trust may be a beneficial owner of a reporting company either by exercising substantial control over the reporting company, or by owning or controlling at least 25 percent of the ownership interests in that company through a trust or similar arrangement. Certain beneficiaries and grantors or settlors may also own or control ownership interests in a reporting company through a trust. The following conditions indicate that an individual owns or controls ownership interests in a reporting company through a trust:
- a trustee (or any other individual) has the authority to dispose of trust assets;
- a beneficiary is the sole permissible recipient of income and principal from the trust, or has the right to demand a distribution of or withdraw substantially all of the assets from the trust; or
- a grantor or settlor has the right to revoke the trust or otherwise withdraw the assets of the trust.
This may not be an exhaustive list of the conditions under which an individual owns or controls ownership interests in a reporting company through a trust. Because facts and circumstances vary, there may be other arrangements under which individuals associated with a trust may be beneficial owners of any reporting company in which that trust holds interests.
Q. How does a reporting company report a corporate trustee as a beneficial owner?
A. For purposes of this question, “corporate trustee” means a legal entity rather than an individual exercising the powers of a trustee in a trust arrangement.
If a reporting company’s ownership interests are owned or controlled through a trust arrangement with a corporate trustee, the reporting company should determine whether any of the corporate trustee’s individual beneficial owners indirectly own or control at least 25 percent of the ownership interests of the reporting company through their ownership interests in the corporate trustee.
- For example, if an individual owns 60 percent of the corporate trustee of a trust, and that trust holds 50 percent of a reporting company’s ownership interests, then the individual owns or controls 30 percent (60 percent × 50 percent = 30 percent) of the reporting company’s ownership interests and is therefore a beneficial owner of the reporting company.
- By contrast, if the same trust only holds 30 percent of the reporting company’s ownership interests, the same individual corporate trustee owner only owns or controls 18 percent (60 percent × 30 percent = 18 percent) of the reporting company, and thus is not a beneficial owner of the reporting company by virtue of ownership or control of ownership interests.
The reporting company may, but is not required to, report the name of the corporate trustee in lieu of information about an individual beneficial owner only if all of the following three conditions are met:
- the corporate trustee is an entity that is exempt from the reporting requirements;
- the individual beneficial owner owns or controls at least 25 percent of ownership interests in the reporting company only by virtue of ownership interests in the corporate trustee; and
- the individual beneficial owner does not exercise substantial control over the reporting company.
In addition to considering whether the beneficial owners of a corporate trustee own or control the ownership interests of a reporting company whose ownership interests are held in trust, it may be necessary to consider whether any owners of, or individuals employed or engaged by, the corporate trustee exercise substantial control over a reporting company. The factors for determining substantial control by an individual connected with a corporate trustee are the same as for any beneficial owner.
Category F. Reporting Requirements
Q. What address should a reporting company report if it lacks a principal place of business in the United States?
A. If a reporting company does not have a principal place of business in the United States, then the company must report to FinCEN as its address the primary location in the United States where it conducts business.
If a reporting company has no principal place of business in the United States and conducts business at more than one location within the United States, then the reporting company may report as its primary location the address of any of those locations where the reporting company receives important correspondence.
If a reporting company has no principal place of business in the United States and does not conduct business functions at any location in the United States, then its primary location is the address in the United States of the person that the reporting company, under State or other applicable law, has designated to accept service of legal process on its behalf. In some jurisdictions, this person is referred to as the reporting company’s registered agent, or the address is referred to as the registered office. Such a reporting company should report this address to FinCEN as its address.
Category G. Initial Report
Q. A company that was created or registered before January 1, 2024, and was exempt from the BOI reporting requirements loses its exempt status between January 1, 2024, and January 1, 2025. How long does the reporting company have to file its initial BOI report?
A. Normally, a company that loses its exempt status must file a BOI report with FinCEN within 30 calendar days after the date that it no longer meets the criteria for any exemption. A reporting company created or registered to do business before January 1, 2024, however, has until January 1, 2025, to file its initial BOI report.
FinCEN has determined that previously exempt entities that existed before 2024 and lose their exempt status in 2024 will receive the benefit of whichever of these two timeframes is longer: (1) the remaining days left in the one-year filing period for existing companies; or (2) the 30-calendar-day period for companies that lose their exempt status.
Thus, for example, if an existing reporting company ceases to be exempt on February 1, 2024, the company will have until January 1, 2025, to file its initial BOI report. If the company ceases to be exempt on December 15, 2024, the company will have until January 14, 2025, to file its initial BOI report.
Category K. Compliance/Enforcement
Q. What penalties do individuals face for violating BOI reporting requirements?
A. As specified in the Corporate Transparency Act, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. However, this civil penalty amount is adjusted annually for inflation. As of the time of publication of this FAQ, this amount is $591.
A person who willfully violates the BOI reporting requirements may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information. [Updated April 18, 2024]
Category L. Reporting Company Exemptions
Q. If the size of a reporting company fluctuates above and below one of the thresholds for the large operating company exemption, does the reporting company need to file a BOI report?
Yes. The company will need to file a BOI report if it otherwise meets the definition of a reporting company and does not meet the criteria for the large operating company exemption (or any other exemption). If the company files a BOI report and then becomes exempt as a large operating company, the company should file a “newly exempt entity” BOI report with FinCEN noting that the company is now exempt. If at a later date the company no longer meets the criteria for the large operating company exemption or any other exemption, the reporting company should file an updated BOI report with FinCEN. Updated reports should be submitted to FinCEN within 30 calendar days of the occurrence of the change.
To qualify for the large operating company exemption, an entity must have more than 20 full-time employees in the United States, must have filed a Federal income tax or information return in the United States in the previous year demonstrating more than $5,000,000 in gross receipts or sales, and must have an operating presence at a physical office in the United States.
Category O. Access to Beneficial Ownership Information
Q. When will authorized recipients have access to beneficial ownership information?
A. FinCEN will take a phased approach to providing access to beneficial ownership information.
- The first phase, expected to begin in the spring of 2024, will be a pilot program for a handful of Federal agency users.
- The second phase, expected in the summer of 2024, will extend access to Treasury offices and other Federal agencies engaged in law enforcement and national security activities that already have memoranda of understanding for access to Bank Secrecy Act information.
- The third phase, expected in the fall of 2024, will extend access to additional Federal agencies engaged in law enforcement, national security, and intelligence activities, as well as to State, local, and Tribal law enforcement partners.
- The fourth phase, expected in the winter of 2024, will extend access to intermediary Federal agencies in connection with foreign government requests.
- The fifth phase, expected in the spring of 2025, will extend access to financial institutions subject to customer due diligence requirements under applicable law and their supervisors.
FinCEN is not currently accepting requests for access to beneficial ownership information. FinCEN will provide further guidance on how to request access in the future.
Q. I work at a Federal agency. How can I request beneficial ownership information from FinCEN?
A. FinCEN is authorized to disclose beneficial ownership information to Federal agencies engaged in national security, intelligence, or law enforcement activities as well as Federal regulatory agencies that supervise financial institutions for compliance with customer due diligence requirements. To request beneficial ownership information from FinCEN, such Federal agencies will first need to enter into a memorandum of understanding with FinCEN describing how the agency will protect the security and confidentiality of the information. Additional information about entering into such a memorandum will be available when your agency becomes eligible to obtain access to beneficial ownership information under the phased implementation timeline.
In the meantime, we encourage agencies interested in access to beneficial ownership information to review the Beneficial Ownership Information Access and Safeguards Rule and become familiar with this rule’s requirements for agencies accessing beneficial ownership information.
Q. Which state agencies can request beneficial ownership information from FinCEN?
A. State, local, and Tribal law enforcement agencies—i.e., government agencies authorized by law to engage in the investigation or enforcement of civil or criminal violations of law—will be able to request beneficial ownership information from FinCEN in certain circumstances. A State, local, or Tribal law enforcement agency, however, can only request beneficial ownership information from FinCEN if authorized by a “court of competent jurisdiction” to seek the information in a criminal or civil investigation. The state, local, or Tribal law enforcement agency also must meet certain other access requirements, including entering into a memorandum of understanding with FinCEN that describes how the agency will protect the security and confidentiality of the information.
Additionally, state regulatory agencies that supervise financial institutions for compliance with customer due diligence requirements may also request beneficial ownership information from FinCEN to conduct such supervision. Like other domestic government agencies, to receive beneficial ownership information from FinCEN, state regulatory agencies must also enter into a memorandum of understanding with FinCEN that describes how the agency will protect the security and confidentiality of the information.
Q. Can foreign governments access beneficial ownership information?
A. Foreign governments cannot directly access the beneficial ownership IT system—the secure system that FinCEN uses to receive and store BOI—but will be able to request beneficial ownership information through intermediary Federal agencies. Foreign governments may request beneficial ownership information for a law enforcement investigation or prosecution, or for a national security or intelligence activity, that is authorized under the laws of the foreign country. There are two different request channels available to foreign governments:
- requests made under an international treaty, agreement, or convention; or
- requests made, when no such treaty, agreement, or convention is available, by a law enforcement, judicial, or prosecutorial authority of a foreign country determined by FinCEN, with the concurrence of the Secretary of State and in consultation with the Attorney General or other agencies as necessary and appropriate, to be a trusted foreign country.
Foreign requests for beneficial ownership information are not yet being processed.
Q. How should authorized recipients prepare to receive, store, and use beneficial ownership information?
A. The preparations necessary to receive, store, and use beneficial ownership information will vary depending on the type of authorized recipient. Those interested in accessing beneficial ownership information should first review the Beneficial Ownership Information Access and Safeguards Rule (and the relevant regulations at 31 CFR 1010.955). Depending on the type of authorized recipient, the requirements may include, but are not limited to, the agency:
- establishing standards and procedures to protect the security and confidentiality of beneficial ownership information received, including procedures for training agency personnel on the appropriate handling and safeguarding of such information;
- providing to FinCEN initially, and annually thereafter, a report that describes the standards and procedures that the agency uses to ensure the security and confidentiality of any beneficial ownership information received;
- providing to FinCEN initially, and thereafter semi-annually, a certification by the head of the agency, on a non-delegable basis, that the agency has standards and procedures that appropriately implement the security and confidentiality requirements;
- establishing or designating, to the satisfaction of FinCEN, a secure system for BOI storage;
- establishing and maintaining a permanent, auditable system of standardized records of the agency’s requests for beneficial ownership information including, for each request, the date of the request, name of individual who makes the request, the reason for the request, any disclosure of such information made by or to the requesting agency, and other information or references necessary to reconstruct reasons for the request;
- conducting an annual internal audit to verify that information obtained from FinCEN has been accessed and used appropriately and in accordance with the established standards and procedures, providing the results of that audit to FinCEN upon request; and
- cooperating with FinCEN’s annual audit of the adherence of agencies to the security and confidentiality requirements to ensure that agencies are requesting and using the information appropriately, including by promptly providing any information FinCEN requests in support of its annual audit.
Q. Although financial institutions subject to customer due diligence requirements are not currently required to access the beneficial ownership IT (BO IT) system, what are the current supervisory expectations if they choose to access beneficial ownership information from the BO IT system, when access becomes available to them?
A. FinCEN anticipates extending access to the BO IT system to financial institutions subject to customer due diligence requirements under applicable law, along with their supervisors, in the spring of 2025. FinCEN intends to provide additional guidance regarding any specific supervisory expectations for financial institutions that choose to access the BO IT system prior to those institutions receiving access to the system.
For more information, see the Interagency Statement for Banks on the Issuance of the Beneficial Ownership Information Access Rule and the Statement for Non-Bank Financial Institutions on the Issuance of the Beneficial Ownership Information Access Rule.
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