Reporting Beneficial Ownership to the Treasury

As a result of the Corporate Transparency Act of 2021, corporations, LLCs, and other entities formed under state law (domestic reporting companies) or similar entities formed under foreign law and registered to do business in the U.S. (foreign reporting companies) must report to FinCEN their beneficial ownership. Why? Kleptocrats, human rights abusers, and other corrupt actors have used complex and opaque corporate structures, including shell companies, to hide and launder the proceeds of their corrupt activities. Beginning January 1, 2024, disclosure is required for a beneficial owner, who is any individual (1) who directly or indirectly exercises “substantial control” over the reporting company, or (2) who directly or indirectly owns or controls 25% or more of the “ownership interests” of the reporting company. Failure to do this can result in civil or criminal penalties. FinCEN has FAQs on this reporting. Additional guidance will be published at www.fincen.gov/boi in the coming months, to include a Small Entity Compliance Guide. #IdeaoftheDay