WASHINGTON – The Financial Crimes Enforcement Network (FinCEN) currently requires “beneficial owners” to be named before buying real estate in some U.S. cities, including Miami.
Starting on Jan. 1, 2024, FinCEN plans to require a similar type of ownership disclosure for about 32.6 million U.S. businesses.
FinCEN is following the U.S. Corporate Transparency Act (CTA) after facing mounting pressure from Congress to provide clarity on the beneficial ownership information (BOI) filing process. The CTA will require businesses to report their beneficial ownership information to FinCEN, a task that is logistically challenging.
The CTA was authorized under the Anti-Money Laundering Act of 2020. Its goal is to combat money laundering and terrorist financing by expanding FinCEN’s regulatory power, since those crimes are often committed by some kind of corporate entity. After the Jan. 1 change, however, the BOI of those entities must be identified.
Four members of the U.S. House expressed have concerns about the change, however, and voiced them in a letter sent to Treasury Secretary Janet Yellen, whose department oversees FinCEN’s actions.
“It is concerning that with six months until its effective date, FinCEN has yet to lay out a clear plan for engagement,” the Representatives wrote. “It is highly unlikely that the 32 million small business owners know what FinCEN is, let alone know to look for a press release on FinCEN’s website. As a result, there is a real possibility that these small businesses could be held civilly or criminally liable for noncompliance.”
According to Internet Law Services, FinCEN estimates that the average cost per reporting company will range from $85.14 for simple beneficial ownership structures to $2,614.87 for complex structures.
However, the FinCEN cost may only be part of the equation since companies have to identify and collect information, possibly with the assistance of other professionals, such as legal or accounting services. As a result, new legal businesses specifically created to help companies with the BOI process have started to emerge.
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