FinCEN Reporting Requirements Have Arrived

February 28, 2023 |

Small Entity Compliance Guide

On April 19, 2022, this Tax Notebook Blog posted “The Coming FinCEN Reporting Requirements.”  That blog post summarized and discussed the Notice of Proposed Rulemaking, published by Treasury’s Financial Crimes Enforcement Network (FinCEN) on December 7, 2021, which promulgated proposed regulations (Proposed Regulations) interpreting the Corporate Transparency Act (CTA).[1]

As reported in that earlier blog post, the goal of the CTA is to combat tax fraud, corruption, money laundering, and other illicit activity, by establishing a federal database, operated by FinCEN, to which corporations, LLCs, and other companies report information about the company’s beneficial owners. According to the preamble to the Proposed Regulations, perhaps as many as 30 million companies will be subject to FinCEN reporting.  Law firms and accounting firms will directly assist the reporting companies, and will face reporting obligations of their own.

Following an extensive public comment period, on September 29, 2022, FinCEN issued the final regulations on Beneficial Ownership Information Reporting Requirements under the CTA (Final Regulations).  The Final Regulations largely track the language of the Proposed Regulations, with a few clarifying changes based on comments received by FinCEN.  This blog post summarizes the reporting requirements in the Final Regulations, which describe: (i) who must file a beneficial owner information (BOI) report, (ii) what information must be reported, and (iii) when a report is due.

Who Must File a BOI Report

Subject to the exceptions described below, any corporation, limited liability company (LLC), or other entity created by a filing with a Secretary of State or any similar office under the law of a State or Indian tribe (e.g., limited partnerships, and business trusts and statutory trusts) is required to report under the Final Regulations. Additionally, any corporation, LLC, or other entity that is formed under the laws of a foreign country and is registered to do business in any State or tribal jurisdiction is also subject to the Final Regulations.

Exemptions From Filing

As with the Proposed Regulations, the Final Regulations lists 23 types of entities that are listed in the CTA as exempt from the definition of “reporting company” and consequently are not required to file reports under the Final Regulations. These include governmental authorities, banks, credit unions, money services businesses, registered broker dealers, exchanges and clearing agencies, insurance companies, accounting firms, public utilities, certain tax exempt entities, and entities assisting tax-exempt entities, among others.

Many of the exempted entities already report information regarding beneficial owners to other credible sources.  Exempted entities include, among others: domestic banks, bank holding companies, savings and loan holding companies, and federal or state credit unions, certain issuers of securities registered with the Securities and Exchange Commission, certain entities registered with the Commodities Futures Trading Commission, certain pooled investment vehicles and tax-exempt 501(c)(3) organizations, investment advisers and insurance companies, registered public accounting firms, and certain public utilities.

Also exempted are companies that: (1) employ more than 20 employees on a full-time basis in the U.S.; (2) have filed U.S. federal income tax returns in the previous year showing more than $5 million in aggregate gross receipts or sales; and (3) maintain an operating presence at a physical office within the United States.  This exemption and those mentioned above indicate that the focus of the CTA is on small businesses and companies which are more likely to have opaque ownership structures susceptible to illicit activity.

The Final Regulations authorize the Treasury Department to exempt additional entities, but FinCEN expressed reluctance to expand the exemptions beyond those enumerated in the CTA. Such an expansion would require a finding that the relevant entity’s submission of a BOI report would not serve the public interest and would not be highly useful in furthering the objectives of the CTA.

Information to be Reported

A reporting company must submit to FinCEN certain information with respect to: (1) the reporting company; (2) each beneficial owner; and (3) the company’s applicant(s).  “Company applicant” is defined as an individual who files the company’s formation document for a domestic company, or the company’s registration document for a foreign company.

The reporting company must report its full name, any alternative names through which the company engages in business, its business street address, its jurisdiction of formation or registration, and its Taxpayer Identification Number (TIN), or, where a foreign reporting company has not been issued a TIN, a taxpayer identification number issued by a foreign jurisdiction and the name of such jurisdiction.

For each beneficial owner and company applicant, reporting companies must disclose the individual’s full legal name, date of birth, current residential or business street address, and a unique identifying number from an acceptable identification document (e.g., a valid passport or driver’s license).  A reporting company is also required to provide a scanned copy of the identification document from which the unique identifying number of the beneficial owner or company applicant is obtained.

In lieu of specific information about an individual, the reporting company may provide the individual’s FinCEN identifier: a unique identifying number assigned by FinCEN to a person by submitting to FinCEN an application containing the information about that person which would be required in a report filed by a reporting company.

Reportable Beneficial Owners

The Final Regulations define a “beneficial owner” as any individual who, directly or indirectly, either: (1) exercises substantial control over a Reporting Company, or (2) owns or controls at least 25% of the ownership interests of a Reporting Company.

The “Substantial Control” Prong

Under the Final Regulations, “substantial control” includes:

(1)       service as a senior officer of the reporting company (the rule defines “senior officer” to include any individual holding the position or exercising the authority of president, CEO, CFO, COO, general counsel, or any other officer performing a similar function);

(2)       authority over the appointment or removal of any senior officer or a majority or dominant minority of the board of directors (or similar body);

(3)       direction, determination or decision of, or substantial influence over, important matters affecting the reporting company; or

(4)       any other form of substantial control over the reporting company.

The first category is intended to cover individuals with nominal legal authority, and the second and third categories are designed to capture individuals with actual authority.  The fourth, catch-all category, appears to leave the door open to an ad hoc assessment of “substantial control.”  Since every person who exercises “substantial control” under any of the four categories is considered a “beneficial owner,” reporting companies could be required to provide information for a large number of individuals.  The Proposed Regulations also discuss “direct and indirect exercise of substantial control,” giving examples of a variety of ways in which control may be exerted.

The “Ownership Interests” Prong

The term “ownership interests” under the Final Regulations is broadly defined, and includes traditional equity interests, as well as other interests such as capital or profit interests, convertible instruments, warrants or rights, or other options or privileges to acquire equity, capital, or other interests in a reporting company.  An individual may own or control an ownership interest in a Reporting Company in a variety of ways, directly or indirectly, including through joint ownership, certain trust arrangements, or acting as an intermediary, custodian, or agent on behalf of another. The regulations provide that convertible instruments, warrants, and other rights to purchase, sell, or subscribe to an ownership interest are included, regardless of whether they are characterized as debt or equity. Puts, calls, and other options to buy or sell ownership interests are also included in the definition of ownership interest, except to the extent created and held by a third party without the knowledge or involvement of the Reporting Company.

“Beneficial owner” does not include minor children (so long as a parent or legal guardian’s information is reported), individuals acting as nominees, intermediaries, custodians, or agents, employees acting solely as employees and not as senior officers, individuals whose only interest in a Reporting Company is a future interest through a right of inheritance, or creditors of a Reporting Company (unless the creditor otherwise meets the definition of beneficial owner by exercising substantial control or by owning or controlling 25% or more of the entity’s ownership interests).

Reporting Company Applicants

The Final Regulations also require new companies created or registered on or after the rule’s effective date of January 1, 2024, to provide the identifying information of Company Applicants. Reporting Companies created or registered prior to January 1, 2024 are not required to report their Company Applicants. If applicable, the Reporting Company must provide a business address for Company Applicants who create or register companies in the course of their business (a residential address is required for beneficial owners).

When to Report

The Final Regulations go into effect on January 1, 2024.

Reporting Companies created before January 1, 2024 will have one year (until January 1, 2025) to file the required information. These companies are required to submit information about their beneficial owners but, as mentioned above, are not required to report information about their Company Applicants.

Reporting Companies created on or after January 1, 2024 will be required to file the required information within 30 days after receiving notice of an effective formation or registration. Companies formed or registered after the effective date of the Final Regulations are required to include information on Company Applicants and beneficial owners.

Any change to the information previously reported concerning a reporting company or its beneficial owners must be reported to FinCEN within 30 days of the date of the change. No updates are required with respect to Company Applicant information. Any inaccuracies must be reported within 30 days of when the Reporting Company becomes aware of the inaccuracy. It is important to note that any time there is a change in an entity’s ownership, whether or not the entity is a Reporting Company prior to the change in ownership, the entity may be required to file a BOI report or update an existing report.


Consistent with the CTA’s penalty framework, willful violations of the Final Regulations may lead to civil or criminal penalties. However, in the preamble to the Final Regulations, FinCEN stated that it “intends to prioritize education and outreach to ensure that all reporting companies and individuals are aware of and on notice regarding their reporting obligations.”

Bottom Line

Beginning in 2024, certain entities organized or registered to conduct business in the U.S. will be required to disclose identifying information about those who form and ultimately own or control the entity. The Final Regulations, which are intended to deter money laundering, corruption, tax evasion and other financial crimes, will create a significant disclosure and filing requirement that entities will need to be aware of and comply with starting in 2024.  Many companies will be exempt from the filing requirements, and U.S. and foreign entities will need to evaluate their own particular circumstances to determine whether they qualify for an exemption under the Final Regulations.  Those that do not qualify will need to understand, and comply with, their filing requirements.

You can find the Final Regulations here:  Beneficial Ownership Information Reporting |

Subsequent Developments

On December 16, 2022, FinCEN issued proposed regulations regarding the Beneficial Ownership Information Access and Safeguards, and Use of FinCEN Identifiers for Entities (Proposed Access Regulations) laying out the protocols for access to the beneficial ownership database by law enforcement and by eligible financial institutions. The stated aim of the Proposed Access Regulations is to provide access to BOI to authorized recipients, while still maintaining the highest levels of data protection and oversight.  These will be addressed in a future Tax Blog post.

[1] 31 U.S.C. Section 5336