Beneficial Ownership Reporting: Promoting Transparency and Combating Illicit Activities

Beneficial Ownership Information reporting (BOI) is a critical tool in the global fight against financial crime, corruption, and money laundering. This reporting mechanism aims to enhance transparency within businesses and financial institutions by identifying and documenting the individuals who ultimately own or control a company.

Beneficial Ownership refers to identifying and disclosing the natural persons who benefit from or have significant control over a company, trust, or other legal entities. These individuals are often referred to as the “ultimate beneficial owners” and may include shareholders, partners, directors, or other individuals with a substantial stake in an organization. BOI mandates the collection and reporting of such ownership information. This regulation comes out of the Corporate Transparency Act and goes into effect January 1, 2024.

Key Elements of Beneficial Ownership Reporting

• Identification: The first step in BOI is identifying the individuals with significant ownership or control over an entity. This process entails collecting personal information, such as names, addresses, and nationality it also includes collecting an image of government issued documents like a passport or driver’s license.
• Verification: Once identified, the reported information must be verified to ensure accuracy and reliability. This helps prevent fraudulent or misleading disclosures.
• Reporting: Beneficial Ownership information is collected by FinCEN through an online portal. Entities created prior to January 1, 2024, have up to a year to complete the filings while companies formed after January 1, 2024, have just 30 days to make their filings.

Significance of Beneficial Ownership Information Reporting

• Transparency and Accountability: BOI promotes transparency by revealing who is behind a company or entity. This transparency enhances accountability, making it more difficult for individuals or organizations to engage in illicit activities anonymously.
• Combating Financial Crime: Beneficial Ownership Reporting is a powerful tool in the fight against financial crime, including money laundering, tax evasion, and fraud. It allows authorities to trace the flow of funds and identify suspicious activities.

The expectation is that BOI will play a vital role in combating financial crime and promoting transparency within the business world. As the world continues to evolve, BOI is expected to be a key tool in ensuring that businesses operate with integrity and accountability, ultimately contributing to a more just and secure global financial system.

A&C Corporate Services provides corporations, limited liability companies, or any entity created with this service in order for entity owners to make sure it complies with the rule. Entities that do not comply with the rule face stiff penalties from FinCEN.

A&C Corporate Services works with clients to leverage its extensive experience and expertise to ensure they comply with State and Federal filing requirements. A&C Corporate Services’ team provides a high level of personal service to clients helping them create and manage entities in all fifty states. We have experience in corporate services, corporate governance, risk management, investment management, product development, and all aspects of fund operations.

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Daniel Strachman is Managing Partner at A&C Advisors LLC