Starting January 1, 2024, many U.S. companies will be required to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This new requirement aims to combat money laundering, terrorist financing, and other illicit activities by increasing transparency in corporate ownership.
- Who is affected? Many entities, both domestic and foreign, that have been incorporated, organized, or registered to do business in any U.S. state or Tribal jurisdiction and that does not otherwise meet one of the exemptions to report. This includes corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the US.
- What entities are exempt from the reporting requirement? There are 23 entity types that are exempt from reporting and include publicly traded companies meeting certain requirements, many nonprofits, and certain large operating companies.
- When is the deadline to file? The first reports are due by January 1st, 2025, for reporting entities created or registered before January 1, 2024. Entities created or registered during 2024 must submit their initial beneficial ownership information report within 90 calendar days of creation or registration.
- What happens if a reporting entity files incorrect information or doesn’t file at all? FinCEN provides a 90-day grace period after filing to voluntarily correct any errors or omissions without penalty. However, entities can face civil and criminal penalties and fines if you disregard your beneficial ownership information reporting requirements, which include civil penalties of up to $500 per day that the violation occurs, criminal fines up to $10,000, and even potential imprisonment.
Business owners and leaders should be proactive in determining whether your business is either required to report beneficial ownership information or if you meet one of the 23 exemptions. While existing companies have until January 1, 2025, to file their initial report, don’t wait until the last minute as the penalty for non-compliance is severe.
At Grapp Lerash, we understand the complexities of beneficial ownership information reporting. Our team is dedicated to guiding you through every step, ensuring compliance, and safeguarding your business’s integrity. Let’s delve into the specifics of your situation and uncover tailored solutions. Connect with us – experience accounting done differently.