Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a final rule requiring certain entities to file reports with FinCEN that identify two categories of individuals — (1) beneficial owners of an entity and (2) individuals who have who have filed an application with specified governmental authorities to create the entity or register it to do business. The new regulations implement Section 6403 of the Corporate Transparency Act (CTA), enacted in 2021.
The regulation requires business entities, including corporations, limited liability companies and other legal entities formed under the laws of the United States or any foreign country that is qualified to do business within the United States, to report certain beneficial ownership information if they are considered a “reporting company”.
The CTA exempts from the definition of “reporting company” twenty-three specific types of entities.
Under 31 CFR 1010.380(a)(1), any entity that meets the definition of a “reporting company” must file a report of beneficial ownership with FinCEN.
In general terms, a beneficial owner is defined as an individual who owns or controls at least 25 percent of “the ownership interests” of the entity. There is more guidance in the final regulations including some specific exemptions.
Reporting requirements will be a providing detail relating to the beneficial owners of a reporting company, including personal identifying information (legal name, date of birth, address etc).
The effective date for these rule changes is January 1, 2024. There are specific deadlines for filing the relevant information. If you think this may affect you, please reach out to your usual Frontier contact.