As a result, “reporting companies,” subject to exceptions, must report information about their business and its beneficial owners to the Financial Crimes Enforcement Network (FinCEN) division of the Treasury Department.
For a full description of the Corporate Transparency Act and what it entails, click here.
What is a “reporting company”?
Generally, reporting companies (e.g., corporation, LLC, Limited Partnership) are entities whose formation requires filing a document with the secretary of state or a similar office.
Information required to be reported to FinCEN by “reporting company”
(1) Full legal name (including any trade name or “doing business as” name)
(2) Business address
(3) Jurisdiction of formation
(4) Taxpayer identification number (TIN), employer identification number (EIN) or a foreign identification number issued by a foreign jurisdiction and the name of that jurisdiction.
What is a beneficial owner?
A beneficial owner is someone who directly or indirectly owns or controls more than 25% of a reporting company, or exercises “substantial control” over a reporting company (e.g., CEO, COO, CFO, general counsel plus those possessing other forms of control).
Information required to be reported to FinCEN by “beneficial owner”1
(2) Date of birth
(3) Current residential address
(4) A unique identifying number from an acceptable identification document (e.g., state driver's license, passport number).
Obtaining a “FinCEN Identifier”
Instead of furnishing the above information to the reporting company, a beneficial owner can furnish that information to FinCEN who will issue the beneficial owner a unique number called a “FinCEN Identifier.” The beneficial owner then furnishes their “FinCEN Identifier” to the reporting company, who then includes that number on the Beneficial Owner Information (BOI) report it files with FinCEN.
Trusts must report if they own or control more than 25% of the reporting company or otherwise has “substantial control” over the reporting company. Trustees, grantors and/or beneficiaries may have to report if they are considered:
• a trustee with the authority to dispose of trust assets, qualifying as a beneficial owner,
• a grantor who has the right to revoke the trust or otherwise withdraw the assets, and
• a beneficiary who is the sole permissible recipient of income and principal, or has the right to demand a distribution of, or withdraw, substantially all the assets.
Reporting companies are obligated to update information by reporting any change to their initial filing within 30 days. Example: Change in residential address.
Potential penalties – $500/day; $10,000 fine and up to two years in prison.
Exceptions: A total of 23 different types of entities are exempt from the definition of a reporting company. Exemptions apply mostly to organizations that are already highly regulated. For instance, there is an exemption for “large operating companies,” which have physical presences in the U.S., more than $5 million of gross receipts or sales on the prior year’s tax return, and more than 20 full-time employees.
Effective date – January 1, 2024. Companies in existence as of 1/1/2024 have until 1/1/2025 to report. Companies formed after 1/1/2024 must report within 30 calendar days of formation.
1This information goes to the reporting company who then furnishes it to FinCEN.
This material is provided for illustrative/educational purposes only. This material is not intended to constitute legal, tax, investment or financial advice.
Effort has been made to ensure that the materialpresented herein is accurate at the time of publication. However, this material is not intended to be a full
and exhaustive explanation of the law in any area or of all of the tax, investment or financial options available. The information discussed herein may not
be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation.
The Bank of New York Mellon, DIFC Branch (the “Authorised Firm”) is communicating these materials on behalf of The Bank of New York Mellon. The Bank
of New York Mellon is a wholly owned subsidiary of The Bank of New York Mellon Corporation. This material is intended for Professional Clients only and no
other person should act upon it. The Authorised Firm is regulated by the Dubai Financial Services Authority and is located at Dubai International Financial
Centre, The Exchange Building 5 North, Level 6, Room 601, P.O. Box 506723, Dubai, UAE. The Bank of New York Mellon is supervised and regulated by the New
York State Department of Financial Services and the Federal Reserve and authorised by the Prudential Regulation Authority. The Bank of New York Mellon
London Branch is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the
extent of our regulation by the Prudential Regulation Authority are available from us on request. The Bank of New York Mellon is incorporated with limited
liability in the State of New York, USA. Head Office: 240 Greenwich Street, New York, NY, 10286, USA. In the U.K. a number of the services associated with
BNY Mellon Wealth Management’s Family Office Services– International are provided through The Bank of New York Mellon, London Branch, One Canada
Square, London, E14 5AL. The London Branch is registered in England and Wales with FC No. 005522 and BR000818. Investment management services
are offered through BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, One Canada Square, London E14 5AL, which is registered
in England No. 1118580 and is authorised and regulated by the Financial Conduct Authority. Offshore trust and administration services are through BNY
Mellon Trust Company (Cayman) Ltd. This document is issued in the U.K. by The Bank of New York Mellon. In the United States the information provided
within this document is for use by professional investors. This material is a financial promotion in the UK and EMEA. This material, and the statements
contained herein, are not an offer or solicitation to buy or sell any products (including financial products) or services or to participate in any particular
strategy mentioned and should not be construed as such. BNY Mellon Fund Services (Ireland) Limited is regulated by the Central Bank of Ireland BNY
Mellon Investment Servicing (International) Limited is regulated by the Central Bank of Ireland. Trademarks and logos belong to their respective owners.
BNY Mellon Wealth Management conducts business through various operating subsidiaries of The Bank of New York Mellon Corporation.
The information in this paper is as of May 2023 and is based on sources believed to be reliable but content accuracy is not guaranteed.
© 2023 The Bank of New York Mellon Corporation. All rights reserved. WM-382310-2023-05-10