In the evolving landscape of financial regulations, staying ahead means understanding the finer points of compliance. At Valhalla Business Advisors, we’re committed to keeping you informed about the latest requirements, including those from the Financial Crimes Enforcement Network (FinCEN) regarding Beneficial Ownership Information (BOI).
Valhalla Business Advisors is pleased to leverage our business experience, education and networks help our community of clients develop resources and solutions to business issues, such as updates to overtime rules and BOI reporting, in addition to our core competencies in employee benefits, health care, and other matters related to HR and corporate finance.
What is FinCEN, what is BOI, and what is the reason for these regulations?
FinCEN, a bureau of the U.S. Treasury, aims to safeguard the financial system from illicit use, combat money laundering, and promote national security through the collection, analysis, and dissemination of financial intelligence. BOI reporting is part of these efforts, designed to identify the real people who own and control businesses, thereby preventing anonymity that could facilitate illegal activities.
Businesses involved in forming new entities or those making specific financial transactions must now provide detailed information about their beneficial owners. This information must be filed at the point of inception and updated as changes occur. Timely compliance is crucial, with initial reports required promptly after formation. Per the FinCEN BOI FAQ page (on 9/6/24):
A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier. Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.
Importantly, reporting companies formed prior to 1/1/24, under current statute, are obligated to report by the end of 2024. Failure to do so may lead to penalties including, according to the FinCEN website (on 9/6/24):
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.
Underline and bold added by Valhalla to create emphasis.
Exceptions to Beneficial Ownership Reporting Requirements
Certain entities are exempt from the Beneficial Ownership Information (BOI) reporting requirements. Exemptions typically apply to entities that are heavily regulated or publicly traded, as these organizations already have significant transparency obligations. Additionally, specific trusts, banks, credit unions, and entities that have demonstrated a low risk for money laundering or terrorist financing also qualify for exemptions. Understanding these exemptions can be crucial for businesses seeking to navigate the complexities of compliance efficiently.
Available resources
FinCEN offers a range of resources to assist in compliance, including detailed FAQs, guidelines, and direct support through their website. For those who find the regulations daunting, Valhalla Business Advisors can offer insight into other resources, including law firms; Interestingly, based upon conversations with representatives of numerous public accounting firms, resources to support clients with BOI obligations seem concentrated in the legal profession. Furthermore, FinCEN reports that there are efforts in the marketplace to exploit this new regime:
Valhalla Business Advisors is pleased to host leading attorneys from McQuaide Blasko to offer insights to clients. This will be held in person in State College, PA on 10/18/24 over the lunch hour; We will also stream the event. To save a spot for either mode, please email tim@valhallaba.com.
Vimeo Recording of October, 2024 Event Below
Pending changes
The future of the Corporate Transparency Act is currently uncertain due to recent legal challenges. On March 1, 2024, the case of National Small Business United v. Yellen resulted in a judgment that the Act oversteps constitutional bounds, leading to a temporary halt in its enforcement against the plaintiffs. Although the Justice Department has appealed this decision, the outcome may lead to significant changes in how the law is applied. For now, businesses not directly involved in the lawsuit must continue to comply with existing FinCEN regulations. This situation underscores the importance of staying informed about legal proceedings that could impact compliance requirements.
The Valhalla advantage
Valhalla Business Advisors is proud to bring boutique services to clients; As a client, details around topics like FinCEN’s BOI rules can feel complicated; Our team and resources can help you. Feel free to reach out to anyone on Team Valhalla to discuss further!
Info for October 18, 2024 Event Below
