Key Changes in FinCEN’s Updated FAQs on Beneficial Ownership Information Reporting (3 Oct 2024)

The Financial Crimes Enforcement Network (FinCEN) recently made significant updates to its Beneficial Ownership Information (BOI) FAQs, clarifying important aspects of the Corporate Transparency Act (CTA). These updates address access, reporting, identification, exemptions, and third-party service provider responsibilities. Below are the key changes, categorized for ease of understanding:

1. General Questions (Section A)

1. Access to BOI: FinCEN clarified the entities allowed access to BOI. These include federal agencies engaged in national security, intelligence, or law enforcement activities, and state and local agencies with court authorization. Financial institutions can access BOI under customer due diligence regulations, and their regulators will also have access to ensure compliance.
2. Freedom of Information Act (FOIA): A new FAQ (A.6) was added, stating that BOI submitted to FinCEN is not accessible under FOIA, emphasizing the sensitive nature of the information.

2. Reporting Process (Section B)

1. Who Can File a BOI Report: Reporting companies can authorize employees, owners, or third-party service providers to file BOI reports. Importantly, non-attorney service providers submitting reports have not engaged in the unauthorized practice of law, as clarified in a new FAQ (B.9). However, the determination of unauthorized practice varies by state.
2. Multiple Beneficial Owners: FinCEN introduced guidance on reporting multiple beneficial owners in one report, allowing users to add multiple owners or company applicants via the BOI reporting system.

3. Reporting Company (Section C)

1. Similar Offices (C.17): FinCEN defines “similar offices” to secretaries of state as offices where domestic or foreign companies file documents for creation or registration. Federal agencies are excluded from this definition.
2. Corporate Conversion (C.18): FinCEN provided guidance on corporate conversions. If a conversion results in a new reporting company, an initial BOI report is required. If not, an updated BOI report may still be necessary due to changes like name or jurisdiction.

4. Beneficial Owner (Section D)

1. Number of Beneficial Owners: FinCEN clarified that there is no maximum number of beneficial owners a company can have. Each company must report at least one beneficial owner with substantial control, as every reporting company is expected to have such control.
2. Community Property (D.18): New guidance for companies registered in community property states requires both spouses to be reported as beneficial owners if applicable state laws recognize shared ownership.

5. Reporting Requirements (Section F)

1. Identification Documents: FinCEN expanded the list of acceptable identification documents (F5), including examples like identification cards issued by state correctional facilities. A new section confirms that U.S. passport cards are also acceptable.
2. Address Confidentiality Programs (F14): Reporting companies are allowed to report an Address Confidentiality Program (ACP) address if a beneficial owner or company applicant is registered in such a program.

6. Reporting Company Exemptions (Section L)

1. Subsidiary Exemption (L6): FinCEN clarified that subsidiaries must be fully owned or controlled by exempt entities to qualify for the subsidiary exemption. Partial ownership or control by non-exempt entities disqualifies a subsidiary.
2. Pooled Investment Vehicle (L10): The FAQ update specifies that the pooled investment vehicle (PIV) exemption applies only when operated or advised by a registered investment adviser. Exempt reporting advisers (ERAs) do not qualify.

7. FinCEN Identifier (Section M)

1. Use and Updates: The updated FAQs provide clarity on when and how a FinCEN identifier can be used. If a beneficial owner or company applicant holds a FinCEN identifier, this can be used in place of other personal information.
2. Automatic Updates: If a FinCEN identifier is updated, all BOI reports associated with that identifier will be automatically updated. This reduces the reporting burden on companies.

8. Third-Party Service Providers (Section N)

1. Best Practices for Filing: While FinCEN does not require third-party service providers to maintain records proving they are authorized to file on behalf of a reporting company, it recommends keeping relevant documentation to avoid civil and criminal penalties in case of fraudulent filings.

Achieving Seamless Compliance with ComplyCTA

Businesses, attorneys, CPAs, Homeowners Associations (HOAs), and other entities looking to comply with these new BOI reporting requirements can rely on ComplyCTA. 

ComplyCTA simplifies the process of identifying, verifying, and registering beneficial ownership information under FinCEN’s Corporate Transparency Act.

With ComplyCTA, users can benefit from:

1. A user-friendly platform for accurate and timely BOI submissions.
2. Comprehensive guidance tailored for various business structures, helping companies navigate complex requirements.
3. Secure management of sensitive information, ensuring compliance while protecting privacy.
4. Integration with third-party service providers, facilitating collaboration between businesses, legal professionals, and accountants.

By leveraging ComplyCTA, entities can ensure full compliance with FinCEN’s BOI requirements, avoiding costly penalties and regulatory risks.

For more information, visit ComplyCTA or reach out to us at support@complycta.us.