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.
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.
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