Utilizing FinCEN Identifiers for Beneficial Ownership Reporting

The Corporate Transparency Act (CTA), enacted in 2021 as part of the Anti-Money Laundering Act of 2020, ushered in new requirements for specific business entities known as Reporting Companies to disclose beneficial ownership information (BOI). The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) recently announced a final rule amending the BOI reporting requirements, allowing Reporting Companies to use FinCEN Identifiers to streamline the reporting process.

Understanding FinCEN Identifiers:

A FinCEN Identifier is a unique number issued by FinCEN upon request, simplifying the reporting process by allowing entities or individuals to provide required identifying information directly to FinCEN. While obtaining a FinCEN Identifier is not mandatory, it can serve as a valuable tool for compliance.

Fundamental Changes in the Final Rule:

The amended rule permits Reporting Companies to report an entity’s FinCEN Identifier and full legal name instead of disclosing other BOI details under certain conditions. These conditions must be met to use this option:

1. The other entity shares a FinCEN Identifier with the Reporting Company.
2. An individual may be a Beneficial Owner of the Reporting Company through an ownership interest in the other entity.
3. The Beneficial Owners of the other entity and the Reporting Company are the same individuals.

Requesting FinCEN Identifiers:

Starting January 1, 2024, individuals who serve as Beneficial Owners or Company Applicants can request a FinCEN Identifier via an electronic web form provided by FinCEN. This identifier can then be used in lieu of providing personal information on a BOI report.

Important Deadlines for Reporting Companies:

Reporting Companies created or registered before January 1, 2024, must submit their BOI reports by January 1, 2025. For entities created or registered on or after January 1, 2024, the initial BOI reports must be filed within 30 days of receiving notice of their company’s creation or registration.

The recent amendments to FinCEN’s BOI reporting requirements offer Reporting Companies a more streamlined approach by introducing the option to use FinCEN Identifiers. As the January 1, 2024, deadline approaches, entities subject to reporting obligations should carefully review and ensure compliance with these new provisions. Understanding the role of FinCEN Identifiers will be instrumental in navigating the complexities of BOI reporting and maintaining regulatory adherence.