As of September 22, 2023, FinCEN released new guidance regarding beneficial ownership information (BOI) reporting which will take effect January 1, 2024. All covered entities must report BOI directly to FinCEN by January 1, 2025, if the entity was created before January 1, 2024. When it comes to reporting companies created after January 1, 2024, they currently will have 30 days after creation to report BOI to FinCEN. However, FinCEN just released a Notice of Proposed Rulemaking to extend the deadline for entities created after January 1, 2024, from 30 days to 90 days.
What Beneficial Ownership Changes Should Financial Institutions Focus On
At this point financial institutions and BSA Departments specifically should familiarize themselves with the BOI rules as they apply to entities. Financial institutions should consider how much assistance will be provided to reporting companies with the new BOI reporting process. FinCEN’s website can be utilized as a great reference for entity customers looking for guidance on complying with the BOI rule. However, it’s important to remember that the beneficial ownership rules as they currently apply to financial institutions have not changed and will most likely not change until January 2025. In other words, financial institutions should continue to obtain beneficial ownership information as they have since May 2018 until the new Customer Due Diligence (CDD) rules are effective.
There are two additional rules that have to become final before we all know how the rules will fully apply to financial institutions. First, the Access Rule is expected to be final in late September or October 2023 based on FinCEN’s rulemaking agenda. This rule will hopefully spell out who can access FinCEN’s BOI records and how that process works. Second is the CDD Rule which will restructure the requirements for financial institutions relative to beneficial ownership. The CDD Rule is expected to be proposed in November 2023 with an expected final rule effective date of January 2025. The CDD Rule will have to work out the differences between the current beneficial ownership rule for financial institutions and the entity requirements under the new beneficial ownership information (BOI) reporting rule as differences currently exist with the definition of “control” and numerous other areas.
For more information about reporting BOI, if a company is exempt or not exempt, how to get the FinCEN identifier, and more information, please visit the links below.
News Release: https://www.fincen.gov/news/news-releases/fincen-issues-compliance-guide-help-small-businesses-report-beneficial-ownership
Small Entity Compliance Guide:
https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf
FAQs: https://www.fincen.gov/boi-faqs
FinCEN’s BOI Webpage: https://www.fincen.gov/boi
Authors: Jeremy Clifton CRCM CAMS, Nick Milcarek
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