The Beneficial Ownership Rule and what’s required for Georgia business accounts.
There is a new rule effective January 1, 2024, that will impact many companies in the U.S. This rule requires certain companies to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company and possibly the company applicants. The information must be reported to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
Additionally, when opening a business account at BankSouth, a Beneficial Ownership Form must be completed. This form is designed to comply with a separate government requirement, known as the Customer Due Diligence Rule. The rule requires identifying the beneficial owners of legal entity customers. This form requires, among other information, the legal entity’s name and business street address and the name, date of birth, address, identification number (i.e. the taxpayer identification number (TIN), Social Security Number (as applicable), the name of the issuing state or country, and number of the passport or driver’s license for the Beneficial Owners and Control Person, as applicable.
Jim Bedsole, BankSouth’s Chief Compliance & Risk Officer, offers crucial insights into the new Beneficial Ownership requirements. Understand your reporting obligations, exemptions, and deadlines to ensure your business stays compliant.
Companies required to report are called reporting companies. Reporting companies have to obtain information from their beneficial owners and report that information to FinCEN.
FinCEN’s website has all the information you need to determine eligibility for exemption. The Small Entity Compliance Guide includes checklists for each of the 23 exemptions. For the full list of companies that qualify for an exemption, visit www.fincen.gov/boi.
In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.
Non-compliance may result in civil & criminal penalties.
Reporting companies will have to report beneficial ownership information electronically through FinCEN’s
website, www.fincen.gov/boi.
A beneficial owner is any individual who directly or indirectly owns or controls 25% or more of a company, or who exercises substantial control over the company. This identification helps prevent the misuse of shell companies for illicit activities.
Certain types of entities are exempt from the reporting requirements, such as publicly traded companies, non-profits, banks, credit unions, and other regulated institutions. Understanding these exemptions is crucial for businesses to determine whether they need to report. For a complete list of exempt entities, visit https://www.fincen.gov/boi-faqs
Non-compliance with the Beneficial Ownership requirements can result in significant fines and criminal penalties. Entities formed before 1/1/2024 have until 1/1/2025 to file, entities formed on or after 1/1/2024 have 90 days from formation to file, and entities formed on or after 1/1/2025 will have 30 days from formation to file.
Elevate your business with comprehensive banking solutions tailored to your needs, offered by BankSouth.