In September 2022, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a rule requiring that certain entities report information about their beneficial owners. A beneficial owner, subject to five specific exceptions, includes anyone who, directly or indirectly, either exercises substantial control over a reporting company or owns or controls at least 25% of the ownership interests of a reporting company. FinCEN has said the goal of the rule is to "unmask shell companies" and "strengthen the integrity and transparency of the U.S. financial system."
Companies created or registered before January 1, 2024, have one year to comply. Companies created or registered after January 1, 2024, will have 30 days to file their initial reports. There is speculation that FinCEN will not have its database running in time to keep these deadlines, and therefore, they could be extended. However, FinCEN did publish its first set of guidance materials on March 24, 2023, so it is important to start collecting the required information to be prepared to comply with the current deadlines. Violations could result in penalties of $500 a day to a maximum of $10,000 and up to 2 years in jail.
You can find FinCEN's guidance materials here. Contact Sherman & Howard's business attorneys to help you start identifying and collecting information and discuss important deadlines and reporting requirements.
The rule, issued by Treasury’s Financial Crimes Enforcement Network (FinCEN), “will make it harder for criminals, organized crime rings, and other illicit actors to hide their identities and launder their money through the financial system,” Treasury Secretary Janet Yellen said in a written statement.