New for 2024: Beneficial Ownership Reporting to the Financial Crimes Enforcement Network

Introduction
As of 2024, businesses operating in the United States face a new set of regulations pertaining to beneficial ownership reporting. These requirements, overseen by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury, aim to enhance transparency in financial transactions and combat financial crimes like money laundering and terrorism financing. This article outlines the key aspects of beneficial ownership reporting and the obligations it imposes on businesses.

What is Beneficial Ownership?
Beneficial ownership refers to individuals who ultimately own or control an entity, such as a corporation, LLC, or similar structure. The definition of beneficial ownership extends beyond mere legal ownership and includes those who have significant control over the entity, such as senior officers, individuals with authority to appoint or remove certain officers or a majority of directors, and important decision-makers.

FinCEN's Reporting Requirements
The 2024 mandate from FinCEN requires certain businesses to report information about their beneficial owners. The following are the main components of these reporting requirements:

• Entities Subject to Reporting: The rule applies to a broad range of entities, including corporations, LLCs, and similar structures. Exceptions exist for publicly traded companies and certain regulated entities.
• Information to be Reported: Entities must provide detailed information about each beneficial owner, including their name, address, date of birth, a unique identification number, and a state driver’s license or U.S. passport.
• Reporting Deadline: If the entity was in existence prior to January 1, 2024, they have until January 1, 2025 to report.  Entities created after January 1, 2024 have 90 days to report, and entities created after January 1, 2025 have 30 days to report. 
• Ongoing Reporting Obligations: There is no annual reporting obligation, however, entities are required to update their information with FinCEN within 30 days if there is a change to the business or beneficial ownership information that was originally reported.

                                                       Short video from FinCEN

                                                 Small Entity Compliance Guide

Conclusion
The above is a general overview of the beneficial ownership reporting requirements and not a detailed list of the rules and regulations.  There has been discussion by regulators about delaying these requirements so we will continue to monitor any changes.  If you have any questions, or would like our help, please give us a call.  

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