As part of the Anti-Money Laundering Act of 2020, the Corporate Transparency Act (CTA) went into effect on January 1, 2024. Unless exempt, U.S. entities must file beneficial ownership information reports with the Financial Crimes Enforcement Network (FinCEN), a part of the Department of the Treasury. The idea is that having a centralized database of beneficial ownership information of business entities created under state law will eliminate critical vulnerabilities in the U.S. financial system.

The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury. The mission of FinCEN is to safeguard the financial system from illicit activity, counter money laundering and the financing of terrorism, and promote national security through strategic use of financial authorities and the collection, analysis, and dissemination of financial intelligence.

In accordance with the Corporate Transparency Act, FinCEN may permit access to beneficial ownership information to:

• Federal agencies engaged in national security, intelligence, or law enforcement activity.

• State, local, and Tribal law enforcement agencies with court authorization.

• Officials at the Department of the Treasury.

• Foreign law enforcement agencies, judges, prosecutors, and other authorities that submit a request through a U.S. Federal agency to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement.

• Financial institutions with customer due diligence requirements under applicable law (in order to facilitate compliance with those requirements).

• Federal functional regulators or other appropriate regulatory agencies that supervise or assess financial institutions with access to beneficial ownership information (in order to supervise such financial institutions’ compliance with customer due diligence requirements).

A FinCEN ID number (#) is a unique identifying number issued to an individual or business entity by FinCEN at no cost. Although there is no requirement by FinCEN to obtain an individual FinCEN ID number to submit a BOI report, doing so simplifies the reporting process, minimizes risks in sharing personal information, and is something that Wayfinder recommends for all persons needing to submit a BOI report. In order to file your BOI report through Wayfinder, we require an individual FinCEN ID number. It is free to obtain a FinCEN ID number.

An individual FinCEN ID number can be reported instead of uploading a photo ID or other personal information about an individual on the reporting company's Beneficial Ownership Information report submitted to FinCEN. When a person is a beneficial owner of more than one business entity, having an individual FinCEN ID number greatly streamlines the reporting process.

Your company will need to report information about its beneficial owners if it is:

1. A corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a Secretary of State or any similar office under the law of a state or Indian tribe; or

2. A foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.

And it is not otherwise exempt under the CTA (see next question).

Twenty-three types of entities are exempt from BOI reporting requirements, including publicly traded companies, nonprofits, and certain large operating companies. They are:

• Securities reporting issuer

• Governmental authority

• Bank

• Credit union

• Depository institution holding company

• Money services business

• Broker or dealer in securities

• Securities exchange or clearing agency

• Other Exchange Act registered entity

• Investment company or investment adviser

• Venture capital fund adviser

• Insurance company

• State-licensed insurance producer

• Commodity Exchange Act registered entity

• Accounting firm

• Public utility

• Financial market utility

• Pooled investment vehicle

• Tax-exempt entity

• Entity assisting a tax-exempt entity

• Large operating company (20 or more full-time employees with sales over $5m)

• Subsidiary of certain exempt entities

• Inactive entity

FinCEN’s Small Entity Compliance Guide includes this table and checklists for each of the 23 exemptions that may help determine whether a company meets an exemption (see Chapter 1.2, “Is my company exempt from the reporting requirements?”). Companies should carefully review the qualifying criteria before concluding that they are exempt.

In addition, if you believe that your entity may be exempt, we recommend contacting a qualified legal professional to help you confirm this before the reporting deadline of January 13, 2025.

If you are filing your own BOI report and have not applied for a FinCEN ID number, you may complete the Beneficial Ownership Information Report without completing the steps to receive a FinCEN ID number for individuals. In Part I of the Beneficial Ownership Information Report there is a box where you can check "Request to receive FinCEN Identifier (FinCEN ID)". By selecting this checkbox, your BUSINESS will receive a FinCEN ID. It will not assign an individual (personal) FinCEN ID to any beneficial owners.

To receive an individual FinCEN ID Number, you will need to visit the section of the FinCEN website: FinCEN ID | Financial Crimes Enforcement Network (FinCEN)

Wayfinder can help. You should start by getting individual FinCEN ID numbers for each person who is a beneficial owner (25% or more ownership) OR exerts substantial control or influence over the business entity. Then contact us to speak with a Wayfinder team member.

A beneficial owner is any individual who owns or controls at least 25% of an organization, or directly or indirectly exercises "substantial control" of the reporting company.

An individual can exercise substantial control over a reporting company in four different ways. If the individual falls into any of the categories below, the individual is exercising substantial control:

1. The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other officer who performs a similar function).

2. The individual has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.

3. The individual is an important decision-maker for the reporting company. Important decisions include decisions about a reporting company’s business, finances, and structure. An individual that directs, determines, or has substantial influence over these important decisions exercises substantial control over a reporting company. For more information see Chapter 2.1, “What is substantial control?” of FinCEN’s Small Entity Compliance Guide

4. The individual has any other form of substantial control over the reporting company as explained further in FinCEN’s Small Entity Compliance Guide (see Chapter 2.1, “What is substantial control?”)

The "substantial control" definition is a new legal term introduced by the CTA. If there is a question about who might be a beneficial owner, we recommend consulting with a qualified legal professional to help you determine this.

A reporting company will have to report:

1. Its legal name;

2. Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names;

3. The current street address of its principal place of business if that address is in the United States (for example, a U.S. reporting company’s headquarters), or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States (for example, a foreign reporting company’s U.S. headquarters);

4. Its jurisdiction of formation or registration; and

5. Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction).

6. The FinCEN ID Number or personal information of each beneficial owner.

A reporting company will also have to indicate whether it is filing an initial report, or a correction or an update of a prior report.

FinCEN’s Small Entity Compliance Guide includes a checklist to help identify the information required to be reported (see Chapter 4.1, “What information should I collect about my company, its beneficial owners, and its company applicants?”)

• If your company was created or registered prior to January 1, 2024, you will have until January 13, 2025 to submit a BOI report. If you would like Wayfinder to file your BOI on your behalf, our deadline is January 6, 2025.

• If your company was created or registered since January 1, 2024, you must report submit a BOI report within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier.

• If your company is created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective.

• Any updates or corrections to Beneficial Ownership Information that you previously filed with FinCEN must be submitted within 30 days.

• FinCEN began accepting reports on January 1, 2024.

All reporting companies will have to report at least one beneficial owner. If no one owns more than 25%, the substantial control factor will apply in determining at least one beneficial owner.

A BOI report will need to be submitted for each business entity that is not exempt.

The reporting company must report all of the company applicants on its BOI report, which includes the persons assisting with creating the company. There is a grace period in 2024 - the BOI report must be filed within 90 days of entity creation, until January 1, 2025, and then the deadline reverts to 30 days. Company applicants do not need to be filed if the entity was created before January 1, 2024. This includes foreign entities registered to do business in the U.S. If your entity was formed in 2024 and did not file a BOI Report within 90 days, it is out of compliance and should file ASAP.

No. There is no annual reporting requirement. Reporting companies must file an initial BOI report and updated or corrected BOI reports if their reported information changes within 30 days of the change.

The following are some examples of the changes that would require an updated Beneficial Ownership Information report, filed within 30 days of the change:

• Any change to the information reported for the reporting company, such as registering a new business name.

• A change in beneficial owners, such as a new CEO, or a sale that changes who meets the ownership interest threshold of 25% or exerts substantial control over the entity.

• Any change to a beneficial owner’s name, address, or unique identifying number previously provided to FinCEN. If a beneficial owner obtained a new driver’s license or other identifying document that includes a changed name, address, or identifying number, the reporting company also would have to file an updated beneficial ownership information report with FinCEN, including an image of the new identifying document.

FinCEN is working hard to ensure that reporting companies are aware of their obligations to report, update, and correct beneficial ownership information.

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 and potentially face criminal charges.

Although it seems likely and we believe that FinCEN will not aggressively enforce these penalties against persons operating in good faith, we cannot know for sure.