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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.
We’re here to help guide businesses file and keep their beneficial ownership requirements up to date. We have a helpful guide that includes an overview, how-to’s, and FAQs regarding the requirement.
Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.
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.
There are 23 types of entities that are exempt from the reporting requirements. Find the complete list at https://banksouth.com/blog/beneficial-ownership-reporting-guide/#Is-Your-Business-Affected
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.
Sometimes. A reporting company is (1) any corporation, limited liability company, or other similar entity that was created in the United States by the filing of a document with a secretary of state or similar office (in which case it is a domestic reporting company), or any legal entity that has been registered to do business in the United States by the filing of a document with a secretary of state or similar office (in which case it is a foreign reporting company), that (2) does not qualify for any of the exemptions provided under the Corporate Transparency Act. An entity’s activities and revenue, along with other factors in some cases, can qualify it for one of those exemptions. For example, there is an exemption for certain inactive entities, and another for any company that reported more than $5 million in gross receipts or sales in the previous year and satisfies other exemption criteria. Neither engaging solely in passive activities like holding rental properties, for example, nor being unprofitable necessarily exempts an entity from the BOI reporting requirements.
No, unless a sole proprietorship was created (or, if a foreign sole proprietorship, registered to do business) in the United States by filing a document with a secretary of state or similar office. An entity is a reporting company only if it was created (or, if a foreign company, registered to do business) in the United States by filing such a document. Filing a document with a government agency to obtain (1) an IRS employer identification number, (2) a fictitious business name, or (3) a professional or occupational license does not create a new entity, and therefore does not make a sole proprietorship filing such a document a reporting company.
FinCEN published the rule that will govern access to and protection of beneficial ownership information on December 22, 2023. Beneficial ownership information reported to FinCEN is stored in a secure, non-public database using rigorous information security methods and controls typically used in the Federal government to protect non-classified yet sensitive information systems at the highest security level. FinCEN will continue to work closely with those authorized to access beneficial ownership information to ensure that they understand their roles and responsibilities in using the reported information only for authorized purposes and handling in a way that protects its security and confidentiality.
FinCEN will continue to provide guidance, information, and updates related to the BOI reporting requirements on its BOI webpage, www.fincen.gov/boi.
Reporting companies will have to report beneficial ownership information electronically through FinCEN’s
website: www.fincen.gov/boi.
If you need assistance with filing, or would like to view additional information and resources, we have a step-by-step guide available at banksouth.com/blog/beneficial-ownership-reporting-guide/.
No, there is no fee for submitting a beneficial ownership information report to FinCEN.
No. FinCEN expects that many, if not most, reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued. Reporting companies that need help meeting their reporting obligations can consult with professional service providers, such as lawyers, accountants, or enrolled agents.
Non-compliance may result in civil & criminal penalties.
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