The Risks of Failing to Report, Submitting an Erroneous Report, or Failing to Supplement BOIR
Without a doubt there will be those who choose to navigate BOI reporting on their own, and inevitably some of them are going to get it wrong. They never imagined they could be slapped with a hefty fine or, in the unluckiest circumstances, face serious jail time for simply making a mistake on a form submission. Yet for some, that will be the reality. You can be held individually liable for failing to report, failing to update information, or incorrectly assuming your entity was exempt. You may be fined $500 per day for non-compliance or even face criminal charges with up to a $10,000 fine and a two-year prison sentence. This is not a situation where any corporate or liability veil accorded to you by your entity’s organization will be effective to shield you from liability. Your business could face similar penalties. Make no mistake about it, the stakes are high.
The Risks are High, if You Don’t Do Things Correctly
Your report must be accurate, timely, and complete. Any change in any reported information must also be timely supplemented. Failing to comply with regards to any of these aspects will result in violations which could expose you and your company to liability. FinCEN responds vigorously to reports of suspicious activity and utilizes their enforcement tools regularly. A recent investigation resulted in a $15 million dollar fine of Shinhan Bank America in September 2023 for failure to follow banking regulations. We should suspect similar enforcement of beneficial ownership reporting rules, particularly at the onset as FinCEN may want to publish examples of where non-compliance gets you. In 2022 alone, FinCEN assessed hundreds of millions of dollars in asset seizures and fines. You don’t have to take my word for it, FinCEN publishes these results in press releases often. Reporting errors are not the only thing to worry about.
Your Beneficial Ownership Information (or BOI) is at risk. The information supplied to FinCEN regarding beneficial ownership information is considered sensitive and confidential. FinCEN itself has acknowledged this and laid out specific guidance regarding the disclosure of this information to third parties, security measures, and penalties for breaching the disclosure guidelines.
It has been less than a week since FinCEN has opened for filing BOIR (which stands for BOI Reports) as of this writing. There have already been reports of fraudulent phishing attempts made by scammers attempting to impersonate FinCEN. The problem has spiraled to the point that FinCEN has placed a public notice on their website warning reporting entities of the phishing attempts. The potential problems this could create are monumental. Your sensitive information is now in the hands of a stranger and worse, you could be under the false impression that your business has complied with the reporting guidelines thus exposing you to the liability mentioned above. Identity thieves could use your information for any number of nefarious purposes. Relying on a professional who understands the proper channels for reporting adds an important layer of protection throughout the reporting process.
Only Licensed Attorneys Can Reduce Your Risks
If the risks of making an incomplete/faulty report and the safe handling of your sensitive information are not enough to convince you to get a lawyer involved in your filing at the front end of things, consider how much money you will spend if a problem occurs down the line. If FinCEN opens an investigation of your business, consider that you will be paying attorney’s fees as well as a possible fine for non-compliance. You do not necessarily need at attorney in order to submit proper reports to FinCEN, but if you need one after you submit the information incorrectly you will not only be facing much larger attorney’s fees than if you had been proactive in the first place, but also civil and criminal penalties. Get the peace of mind that only compliance with the regulations can bring – consider hiring an attorney before you have no choice but to hire an attorney to handle a much larger problem.
