Author: Dr. Angelika Hellweger 25 April 2023
Angelika Hellweger of Rahman Ravelli summarises the advice the US Financial Crimes Enforcement Network is providing to ensure compliance with the Corporate Transparency Act.
The United States’ Financial Crimes Enforcement Network (FinCEN) has published its first set of guidance relating to the beneficial ownership information reporting requirements that come into effect next year.
The guidance is intended to help the public, and in particular the small business community, understand the reporting requirements that come into force on January 1, 2024. FinCEN will not be accepting any beneficial ownership information before that date.
The new regulations require corporations, limited liability companies and other entities that were created in the US or are registered to do business there to report information about their beneficial owners - the persons who ultimately own or control the company - to FinCEN. Entities that may potentially qualify as reporting companies should take steps to understand their reporting requirements ahead of the regulations taking effect - and consult with their legal counsel to ensure compliance.
The Corporate Transparency Act requires the filing with FinCEN of the business name, current address, state of formation and employer identification number (EIN) of each entity, as well as the name, birth date, address and government-issued photo ID (such as a driver’s licence or passport) of every direct or indirect beneficial owner of the entity. A failure to comply with this can lead to penalties of $500 a day up to $10,000 and up to 2 years in jail.
The Act, which was enacted by Congress in 2021, led to the creation of a database of beneficial ownership Information in an attempt to tackle money laundering and the movement of proceeds of crime through shell companies in the US.
The guidance now being provided at FinCEN’s beneficial ownership information reporting webpage www.fincen.gov/boi includes answers to frequently asked questions about the reporting requirement, detailed information about key filing dates and explanatory videos. Additional guidance, including a “Small Entity Compliance Guide’’, will be published in the coming months.
Angelika is a specialist in international, high-level economic crime investigations and large-scale commercial disputes. She has widely-recognised expertise in representing corporates and conglomerates in Europe, the Middle East, Africa and United States.