“FinCEN encourages financial institutions to share this reference guide with customers that may be required to report beneficial ownership information” is the message that FinCEN released on 7/26/24. The FinCEN Notice to Customers is intended to facilitate communication between Financial Institutions and customers regarding Beneficial Ownership Information (BOI) requirements. The FinCEN Notice to Customers states that: “This guide answers key questions about these two separate requirements: (1) reporting beneficial ownership information to FinCEN under the CTA; and (2) providing beneficial ownership information to financial institutions in connection with Federal customer due diligence requirements”. That said, the important takeaway of the FinCEN Notice to Customers is that:

• Entities may have to “provide beneficial ownership information to both FinCEN and a financial institution”.
• “FinCEN and financial institutions do not collect the exact same types of beneficial ownership information”.

Entities that are required to report BOI are Reporting Companies

Reporting companies are required to report information to FinCEN about the individuals who ultimately own or control them. FinCEN began accepting reports on January 1, 2024. Reporting Companies have a significant obligation to understand and comply with the BOI reporting rule and file the Beneficial Ownership Information Report(s) (BOIR). There are serious fines and penalties as well as imprisonment for not complying with FinCEN’s BOI reporting requirements. Given the complexity around the responsibilities associated with BOI compliance, as well as the risks associated with not complying, it is BEST to NOT get caught without a beneficial ownership report! BOI Compliance/Enforcement will continue to be complex and constantly evolving.

Here are Extracts from the FinCEN Notice to Customers that may provide clarity:

Will an entity potentially have to provide beneficial ownership information to both FinCEN and a financial institution? Yes. FinCEN and financial institutions both collect beneficial ownership information from entities. However, they collect that information for different reasons and, in some cases, may collect different types of information. If an entity is required to report beneficial ownership information to FinCEN, that requirement cannot be fulfilled by providing beneficial ownership information to a financial institution. For example, if an entity seeks to open an account at a bank, the bank may be required to request certain information about the entity’s beneficial owner(s) before the account can be opened. That information is collected by the bank, not by FinCEN, when fulfilling its Federal customer due diligence obligations. That same entity may separately be a “reporting company” under the CTA that is required to report beneficial ownership information to FinCEN. Additional information about the requirements for entities to report beneficial ownership information to FinCEN, including exemptions, can be found at https://www.fincen.gov/boi

Are FinCEN and financial institutions collecting the exact same beneficial ownership information? No. FinCEN and financial institutions do not collect the exact same types of beneficial ownership information. For example, financial institutions are required to collect social security numbers of beneficial owners, but social security numbers are not required to be reported to FinCEN.

FinCEN began accepting beneficial ownership reports pursuant to the CTA on January 1, 2024.

• If your company was created or registered prior to January 1, 2024, you have until January 1, 2025, to report.
• If your company is created or registered in 2024, you must report within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier.
• If your company is created or registered on or after January 1, 2025, you must report within 30 calendar days after receiving actual or public notice that its creation or registration is effective.
• Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 calendar days.

Financial Institutions have the responsibility to educate their customers

Financial Institutions ought to be able to alert their customers about FinCEN reporting and financial institution collection of BOI.

Is your financial institution up to date with the differences between the requirements for the CTA and Customer Due Diligence as highlighted in the FinCEN Notice to Customers?

Who is your Corporate Governance Advisor?