FinCEN extends BOI reporting deadline for new firms

The US Financial Crimes Enforcement Network (FinCEN) has proposed extending some companies’ final beneficial ownership information (BOI) reporting deadlines. The amendment would change the initial reporting deadline for firms created or registered in 2024 from 30 to 90 days. The January 1, 2025 deadline would remain the same for companies created or registered before 2024.

“We anticipate that the proposed extension of the BOI reporting deadline for the first year of implementation will increase compliance, reduce burden on reporting companies, and promote the creation of a highly useful database,” commented FinCEN Director Andrea Gacki.

BOI rule: Background and focus

The rule, which was issued in September 2022, involves several key elements, including:

• Reporting companies: The reporting rule establishes domestic and foreign reporting companies and exempts 23 types of entities from the definition of “reporting company.”
• Beneficial owners: The rule identifies a beneficial owner as any individual who exercises substantial control over a reporting company or owns/controls at least 25 percent of the ownership interests. 
• BOI reports: A reporting company must identify itself and report the name, date of birth, address, and unique identifying number of each beneficial owner.

It’s the first of three rules designed by FinCEN to set up the beneficial ownership registry, as required by the Corporate Transparency Act (CTA). The second rule relates to those who can access the registry, and the third is connected to updating the existing customer due diligence (CDD) rule. 

The CTA was established was enacted in 2021 as part of the Anti-Money Laundering Act (AMLA), which required FinCEN to maintain beneficial ownership information reported by certain business entities in a confidential, secure, and non-public national registry. 

The deadline extension

In its Advance Notice of Proposed Rulemaking, FinCEN explains that the new deadline would help firms comply by giving firms:

• More time to understand their obligations under the new rule – Firms may need time to determine whether they meet the definition of a “reporting company” or the meaning of key terms under the rule (such as “beneficial owner”). To help with this, FinCEN is also publishing guidance and reference materials to help answer key questions firms may have.
• Enough time to collect the required information – The information collecting process for FinCEN may be unfamiliar for newer firms, so the new deadline provides additional time for them to navigate it.
• Time to resolve any questions arising during the process – In addition to giving new firms time to review supporting documentation on the rule, the extension will give FinCEN time to address incoming questions for firms.

Next steps 

Firms that will not be registered until 2024 can consult FinCEN’s September 2022 Advance Notice of Proposed Rulemaking for more details on the new reporting deadline. Reporting firms (or firms who aren’t sure if they qualify) can also consult the final rule along with several resources FinCEN has released to further guide them, including:

• General reporting guidance, which includes frequently asked questions, key filing dates, and informational videos.
• Compliance guide for small entities, which aims to help firms, particularly small businesses, understand and comply with the rule.