Changes to BOI Reporting in 2024

The Goal of BOI
The Corporate Transparency Act’s (CTA) final rule, implemented by FinCEN, for the Beneficial Ownership Information Report, implemented by FinCEN, serves as a crucial tool in strengthening U.S. national security. By focusing on beneficial ownership reporting, the rule aims to combat illicit activities and protect the U.S. financial system from misuse. The NYTA, effective in 2024, introduces transparency measures for limited liability companies (LLCs). Modeled after the federal Corporate Transparency Act (CTA), it exclusively applies to LLCs, differing from the broader CTA coverage.

Challenges of Illicit Actors
Illicit actors often exploit corporate structures, such as shell companies, to conceal their identities and launder money. Such activities not only compromise national security but also pose significant threats to the economic well-being of the United States.

Why Now
Recent global events, including Russia’s invasion of Ukraine, underscore the attempts by foreign entities to leverage U.S. and non-U.S. shell companies to evade sanctions. The rule is strategically positioned to thwart such attempts, fortifying national security against a range of criminal activities.

Things To Note
Reporting companies are now required to file reports with FinCEN, identifying beneficial owners and, for entities formed after January 1, 2024, company applicants. The provided information includes names, birthdates, addresses, unique identifiers, and document images, fostering transparency and accountability.

Key Elements of the Rule:
Reporting companies are categorized as domestic and foreign, covering a spectrum of entities. Certain trusts are excluded to alleviate the burden on small businesses.

Beneficial owners are individuals exercising substantial control or holding at least 25% ownership, with specific exemptions outlined in the rule.

Company applicants are those directly involved in filing documents to create or register the entity.

NYTA Insights:
Nonexempt LLCs must provide beneficial ownership information to the New York Department of State, aligning with CTA requirements.

Confidentiality is assured, restricting access to governmental authorities, with public disclosure considerations excluded.

Implementation Timeline:
The rule comes into effect on January 1, 2024. Existing reporting companies have until January 1, 2025, to file initial reports, while those created after January 1, 2024, must file within 30 days of creation.

Upcoming Steps and Compliance:
FinCEN’s proactive approach involves additional rulemakings to regulate access to Beneficial Ownership Information (BOI), establish safeguards, and revise customer due diligence rules. The Beneficial Ownership Secure System (BOSS) will play a pivotal role in securely storing this critical information.

Conclusion:
The BOI reporting rule is a significant stride towards transparency, security, and combating financial crimes. As your trusted financial partner, we remain committed to navigating these changes seamlessly and ensuring compliance for the benefit of all stakeholders.