• Deborah

Released on September 29 by the U.S. Treasury’s Financial Crimes Enforcement Network(FinCEN), the Final Rule requires each entity created in or registered to do business in the United States to report information about the persons who ultimately own or control the company.

The Beneficial Ownership Information Reporting Rule will help combat the use of shell companies to launder money or hide assets.

Key highlights of the Final Rule are as follows:

  • Reporting companies: The rules will apply to domestic and foreign entities.

  • Beneficial owner definition: Any individual who, directly or indirectly, either (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of the ownership interests of a reporting company. The rule provides standards and mechanisms for determining whether an individual owns or controls 25 percent of the ownership interests of a reporting company.

  • Company applicant designation: Reporting companies will have to designate their company applicant who should be either (i) the individual who directly files the document that creates the entity, or in the case of a foreign reporting company, the document that first registers the entity to do business in the United States; or (ii) the individual who is primarily responsible for directing or controlling the filing of the relevant document by another.

  • Beneficial Ownership Information Report: A reporting company will have to identify itself and report four pieces of information about each of its beneficial owners: (i) name, (ii) birthdate, (iii) address, and (iv) a unique identifying number and issuing jurisdiction from an acceptable identification document (and the image of such document). Additionally, reporting companies created after January 1, 2024, will have to provide the four pieces of information and document image for their company applicants.

The rules will be effective on January 1, 2024.

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