INVESTMENT ADVISER LAW BLOG

As part of ongoing efforts to enhance transparency and combat financial crimes, the Financial Crimes Enforcement Network (FINCEN) of the U.S. Department of the Treasury has implemented new regulations regarding beneficial ownership information. These regulations aim to increase accountability and prevent the misuse of corporate entities for illicit purposes.

Under these regulations, certain entities, including corporations, limited liability companies (LLCs), limited partnerships (LPs), limited liability partnerships (LLPs) and other similar legal structures, are required to file a Beneficial Owner Information Report (BOI Report) with FINCEN. This report collects information about the individuals who ultimately own or control the legal entity, commonly referred to as beneficial owners.

Most companies will be required to submit a BOI Report although there are 23 categories of legal entities that are not required to report, including SEC-registered (but not state-registered) investment advisers and broker-dealers. In short, each reporting business will need to provide information regarding any beneficial owner holding 25% or more of the equity in the business. However, in most instances, legal entities are required to additionally report information on persons with “substantial control” over the legal entity regardless of whether they have an equity interest in the company; these can include President, CEO, CFO, COO, GC, Manager(s) of LLCs, General Partners of LPs, etc. To determine who must be included in the BOI Report, click below for a copy of the BOI Small Entity Compliance Guide.

It is imperative that your business complies with these regulations to avoid potential penalties and legal consequences. Failure to file the required report with FINCEN by the specified deadline could result in fines and other enforcement actions. For a legal entity formed prior January 1, 2024, you must submit your BOI Report on or prior to January 1, 2025. For any legal entity formed on or after January 1, 2024, the deadline for your BOI Report is within 90-days from the date of formation.

To determine whether your legal entity is subject to this reporting requirement and to understand the necessary steps for compliance, we recommend you click the link below and review the BOI Small Entity Compliance Guide and/or immediately contact our office or your CPA. 

You may file your BOI Report on your own, but the process is not entirely intuitive. The online portal to file a BOI Report can be found at: https://boiefiling.fincen.gov/fileboir.

If, however, you need assistance with filing your BOI Report, please contact me. 

Click Here for the BOI Small Entity Compliance Guide

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Jack G. Martel is the author of Investment Adviser Law Blog which is devoted to providing information and discussion of interest to investment advisers, private fund managers and others in the financial management industry. Jack is a partner in Ragghianti | Freitas LLP. He has over twenty years’ experience in general business and securities transactions with a focus on assisting investment advisers, fund sponsors and managers in all manner of legal, regulatory and compliance issues. Jack can be reached at 415.453.9433.