The Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that eliminates the requirement for U.S. companies and persons to report beneficial ownership information (BOI).
Specifically, the interim final rule revises the definition of “reporting company” in its implementing regulations to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with secretary of state or similar office. Further, FinCEN exempts entities previously known as “domestic reporting companies” from BOI reporting requirements.
What this means is that all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners will be exempt from the requirement to report BOI to FinCEN.
Also, foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines. Reporting companies registered to do business in the United States before the date of publication of the IFR must file BOI reports no later than 30 days from that date. Reporting companies registered to do business in the United States on or after the date of publication of the IFR have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.
It should be noted that these foreign entities will not be required to report any U.S. persons as beneficial owners. Further, U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.
FinCEN intends to finalize the rule this year. It is currently accepting comments on the interim final rule.
The National Federation of Independent Business (NFIB) supports the changes.
“NFIB has been steadfast since the beginning that this onerous requirement is a massive intrusion into small businesses’ privacy and creates an unprecedented new government database on Americans. We agree with President Trump that requirements from the Corporate Transparency Act are ‘outrageous and invasive,’” NFIB President Brad Close said. “NFIB will continue to work with Congress to put the Administration’s actions into law and repeal the CTA fully. Furthermore, Congress should direct FinCEN to immediately destroy all of the data that was already submitted by small businesses out of fear they would face fines and prison time.”