With the new year just a few short months away, WBA is fielding more questions regarding the Financial Crimes Enforcement Network’s (FinCEN’s) beneficial ownership information (BOI) reporting rule, so this Executive Letter provides a summary of the rule and the resources created by FinCEN.
The rule applies to domestic and foreign companies that do not qualify for an exemption from the rule. A domestic and foreign company that is not exempt from reporting is referred to as a reporting company both under the BOI rule and in this Executive Letter.
Filing Begins January 1, 2024
Under the FinCEN BOI reporting rule, a reporting company must report specific information about the company, its beneficial owners, and, in some circumstances, its company applicants — the individual who filed the documentation to create the reporting company.
Any domestic or foreign reporting company created on or after January 1, 2024, must file an initial report within thirty (30) calendar days of the earlier of (a) the date on which the entity receives actual notice that its creation has become effective or (b) the date on which Department of Financial Institutions (in Wisconsin) first provides public notice, such as through a publicly accessible registry, that the reporting company has been created. FinCEN is proposing to extend this timeline to ninety (90) days only for reporting companies created on or after January 1, 2024, and before January 1, 2025.
Any domestic or foreign reporting company created before January 1, 2024, will have until January 1, 2025, to file their initial BOI report with FinCEN.
WBA filed comments with FinCEN requesting that the proposed 90-day timeline change be made permanent. I also strongly recommended FinCEN conduct more outreach to the business community about the reporting rule and about FinCEN itself as I believe many businesses are not familiar with either. These suggestions were shared in person with senior FinCEN officials when we met with them two weeks ago in Washington, D.C. FinCEN will publish a final rule if the proposal is adopted.
FinCEN will be creating a portal for reporting companies for filing required BOI electronically. The portal for filing BOI reports will not be in effect until January 1, 2024.
Updated and Corrected Reports
If there is any change with respect to required information previously submitted to FinCEN concerning a reporting company or its beneficial owners, including any change with respect to who is a beneficial owner or information reported for any particular beneficial owner, the reporting company must file an updated report within 30 calendar days after the date on which such change occurs.
In general, when an updated report is required to be filed, it must reflect any change with respect to the required information previously submitted to FinCEN concerning a reporting company or its beneficial owners.
To assist reporting companies with their filings, FinCEN has created several helpful resources. First, it released a Small Entity Compliance Guide in which there is detailed information to help answer questions.
FinCEN has also created a series of frequently asked questions (FAQs) which are in response to inquiries received related to the rule. The FAQs include answers related to general topics, the reporting process, and about what companies are required to report BOI information to FinCEN.
Quick reference materials are also available. Several of the quick references are available in Spanish, Chinese Simplified, and Chinese Traditional. FinCEN has also created two videos regarding the rule.
The new resources are easily found on FinCEN’s BOI Reporting website. Business customers asking bankers about the BOI reporting rule should be referred to that website.
Role of Financial Institutions
It is clear under FinCEN’s BOI reporting rule that the reporting company is the party solely responsible for accurately filing its information with FinCEN. Financial institutions are not required to first verify or otherwise confirm a reporting company’s filing status when working with their business customers.
It is also clear under FinCEN’s BOI reporting rule and its Customer Due Diligence (CDD) rule, that much work remains to reconcile these two areas of law. The two rules are not identical thereby resulting in reporting companies having to report certain information to FinCEN and banks having to comply with the CDD rule which collects different information from the business customer, albeit there is some overlap.
Unfortunately, until there can be reconciliation between the two rules, business customers may be frustrated or confused about what they need report directly to FinCEN and why the bank is still asking for similar information when establishing a relationship. I recommend members be prepared to explain the differences to help ease any frustration or concern. To assist with those discussions, WBA will be creating a customer-facing information piece explaining who FinCEN is and the general requirements under BOI and CDD rules, including that banks are still required to ask for beneficial ownership information. A resource comparing both rules will also be created for bankers to use. The resources will be made available on the WBA website in the near future.
WBA will also continue to strongly advocate for consistency between FinCEN’s BOI and CDD rules and to ensure no additional regulatory burden is added to banks’ existing BSA-related responsibilities. It is anticipated FinCEN will issue a proposal rule to revise its CDD rule to bring it into alignment with the BOI rule sometime in 2025.