- Your company may be approached with an offer to help you file Beneficial Ownership Information Reports (BOIRs) with FinCEN, the Financial Crimes Enforcement Network of the U.S. Department of the Treasury.
- You may be told that BOIRs are required or that FinCEN is accepting voluntary reports.
- You may be pressured to help the federal government fight money-laundering and the financing of terrorism.
You may also be dealing with a scam artist.
Here is the background:
FinCEN is indeed the Financial Crimes Enforcement Network, an arm of the U.S. Dept. of Treasury. In 2021, Congress adopted the Corporate Transparency Act (CTA), intended to uncover sources of money laundering, fraud, and terrorism financing. Seeking who controls money within corporations, CTA required small corporations (S corps and LLCs) to report “beneficial ownership” information to FinCEN. (That information was already largely known for larger and publicly traded corporations.)
“Beneficial owners” are defined by the CTA as persons who hold a 25% or more stake in a corporation. But “beneficial owners” also include senior corporate officials and persons who “substantially control” major business decisions, even through board memberships or interlocking companies, regardless of how much financial ownership of your business they may have.
Beneficial Ownership Information Reports would send to FinCEN significant personal information on each “beneficial owner,” including name, address, Social Security number, passport number, copies of driver’s licenses and state identification cards – information companies and individuals consider private and not for public view.
The deadlines for submitting BOIRs to FinCEN began in December 2024. Deadlines depended on when the corporation was officially formed.
Courts across the country have arrived at differing decisions on the constitutionality of CTA. However, on December 26, 2024, the 5th Circuit Court of Appeals issued a nationwide injunction against enforcement of the Corporate Transparency Act. FinCEN has acknowledged that injunction, as it appeals the decision. FinCEN has said it would continue to accept “voluntary” BOIRs – but “voluntary” means that a report is not currently required. Since the December 26 nationwide injunction, a second court has also enjoined the CTA compliance mandate. Legislation to repeal the Corporate Transparency Act has been introduced in the new Congress. Congressional action may take time.
For now, hold still. There is continuing litigation. As mentioned, there may also be actions in the new Congress or by the White House. As a result, the content and timing of BOIRs may be changed. Or there may be no need to file at all.
Remember: whenever the government requests information, scam artists are always there to help you provide it… and then use your data for their own nefarious purposes. Only work with the people you know and trust.