FinCEN Announces Updates to Its FAQ

Date: 1/1/2024

FinCEN Updates Frequently Asked Questions on Beneficial Ownership Information

The Financial Crimes Enforcement Network (FinCEN) has updated its Beneficial Ownership Information Frequently Asked Questions to include new information about reporting companies, beneficial owners, company applicants, reporting requirements, and reporting company exemptions, as well as updated information about FinCEN identifiers.

FinCEN is now accepting beneficial ownership information reports. Filing is simple, secure, and free. To find out more about the reporting process, visit https://www.fincen.gov/boi.

Frequently Asked Questions: https://www.fincen.gov/boi-faqs

Questions Updated?

FinCEN updated the following questions and answers in its FAQ:

• • A. 3. Under the Corporate Transparency Act, who can access beneficial ownership information?  Nothing new here.

 

• • B. 1. Should my company report beneficial ownership information now?  The quick answer is “sure,” and then a surprise:  Reporting companies created now or after January 1st, 2024, have 90-days to file their initial BOIR.  However, reporting companies created after January 1st, 2025, will only have 30-days to file their initial BOIR.  It seems the 90-day extension for new companies is just temporary.

 

• • B. 4. Will there be a fee for submitting a beneficial ownership information report to FinCEN?  Nothing new here.  Answer is “no”.

 

• • B. 5. How will I report my company’s beneficial ownership information?  Nothing new here.

 

• • B. 6. Where can I find the form to report? Nothing new here.  Answer is at https://www.FinCEN.com/boi.

 

• • C. 7. Can a company created or registered in a U.S. territory be considered a reporting company?  Nothing new here.  Answer is “yes”.

 

• • D. 11. What should a reporting company report if its ownership is in dispute?  This is a GREAT question, and FinCEN completely dodges the question by basically repeating the general rule:  You need to report (1) all individuals who exercise substantial control over the company, and (2) all individuals who own or control, or have a claim to ownership or control of, at least 25 percent ownership interests in the company.  The problem is, I don’t think the FinCEN interface (I honestly haven’t tried it yet, so will update this once I do), permit you to enter a name with missing personal information because the Beneficial Owner is refusing to give that information up?  This is going to be a big issue in the upcoming months and years.

 

• • D. 12. Who does a reporting company report as a beneficial owner if a corporate entity owns or controls 25 percent or more of the ownership interests of the reporting company? This is an interesting question, and FinCEN says (1) you need to report the BOI of those individuals who indirectly either (1) exercise substantial control or (2) own or control 25% or more of the ownership interests in the Reporting Company.  If FinCEN stopped there, I would have said “nothing new here.”  However, FinCEN then goes on to say that there are two narrow exceptions.  First, you can report the entity itself instead of any individuals, if that entity is an exempt entity.  Second, “If the beneficial owners of the reporting company and the intermediate company are the same individuals, a reporting company may report the FinCEN identifier and full legal name of an intermediate company through which an individual is a beneficial owner of the reporting company.”   This all makes sense, but it’s good to see FinCEN address it directly.

 

• • E. 5. The company applicants of a reporting company include the individual “primarily responsible for directing the filing of the creation or registration document.” What makes an individual “primarily responsible” for directing such a filing?  Nothing new here, although FinCEN does clarify what “primarily responsible” is with some examples.

 

• • E. 6. Is a third-party courier or delivery service employee who only delivers documents that create or register a reporting company a company applicant? Obvious answer is “no”.

 

• • E. 7. If an individual used an automated incorporation service, such as through a website or online platform, to file the creation or registration document for a reporting company, who is the company applicant?  Interesting question.  FinCEN says if it’s purely software, and the “automated incorporation service” has no helping hand in the filing, then the individual ordering the service is the “Company Applicant”.

 

• • F. 10. If a beneficial owner or company applicant’s acceptable identification document does not include a photograph for religious reasons, will FinCEN accept the identification document without the photograph?  Answer is “this is permissible,” provided it’s one of the required forms of ID.

 

• • F. 11. What residential address should be reported if a reporting company is required to a report individual’s residential address, but that an individual does not have a permanent residential residence? Answer is “wherever the person is currently living,” and don’t forget you need to update the BOIR within 30-days when this changes.

 

• • G. 3. How can I obtain a Taxpayer Identification Number (TIN) for a new company quickly so that I can file an initial beneficial ownership information report on time?  FinCEN basically shows some ignorance here.  The answer is “not our problem,” and they provide some what I think is outrageous advise (i.e. for paper filings, “do it early” even though the entity is not formed, which I believe is contrary to IRS rules).

 

• • L. 6. Does a subsidiary whose ownership interests are partially controlled by an exempt entity qualify for the subsidiary exemption?  Nothing new here.  The answer is “no”.

 

• • M. 2. How can I use a FinCEN identifier?  Nothing new here, except FinCEN does identify three areas where a company instead of an individual may be reported to FinCEN: ” (1) the other entity obtains a FinCEN identifier and provides it to the reporting company; (2) the beneficial owners hold interests in the reporting company through ownership interests in the other entity; and (3) the beneficial owners of the reporting company and the other entity are the exact same individuals.“

 

• • M. 3. How do I request a FinCEN identifier?  Nothing new here.  Answer is, submit your information to FinCEN using their portal.

 

• • N. 1. Can a third-party service provider assist reporting companies by submitting required information to FinCEN on their behalf?  Answer is “yes”, and FinCEN includes instructions on how to request access to their API.

 

That’s it for January updates.