美国财政部下属的金融犯罪执法局（FinCEN）根据《企业透明法》推出了新的受益所有权信息申报制度，旨在通过该制度的实施，加强反腐败力度并打击犯罪，更有效地遏制不法分子利用空壳公司等不透明的所有权结构从事非法活动。此项规定将于2024年1月1日正式生效，届时要求大部分在美国从业的美国和海外商业实体提供其直接或间接受益所有权人以及控制这些实体的个人的信息。欢迎对此有需求的客户联系我们以为您提供进一步服务。
On September 30, 2022, the U.S. Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a final rule (“Final Rule”) pursuant to the Corporate Transparency Act (“CTA”), requiring most entities formed in or registered to do business in the U.S. to submit beneficial ownership information (“BOI”) reports to FinCEN.[1] Subsequently, on November 8, 2023, FinCEN issued an amendment to the Final Rule, specifying how and when reporting companies may use a FinCEN identifier to fulfill their BOI reporting requirements under the Final Rule[2] (the amendment, together with the Final Rule, the “Reporting Rule”). The Reporting Rule will become effective on January 1, 2024.
In this client alert, we will provide an overview of the relevant requirements of the Reporting Rule, including (i) who must file a BOI report, (ii) identification the beneficial owner, (iii) information required to be filed with FinCEN; (iv) compliance timeline and non-compliance consequences, and (v) next steps. We will also discuss implications for non-U.S. companies.
Summary
- Objective: to enhance the U.S. government’s ability to collect BOI to deter money laundering, corruption, fraud, and other financial crimes.
Beneficial Ownership Information Reporting Requirements (https://www.federalregister.gov/documents/2022/09/30/2022-21020/beneficial-ownership-information-reporting-requirements)
Use of FinCEN Identifiers for Reporting Beneficial Ownership Information of Entities (https://www.federalregister.gov/documents/2023/11/08/2023-24559/use-of-fincen-identifiers-for-reporting-beneficial-ownership-information-of-entities)
“The rule will enhance the ability of FinCEN and other agencies to protect U.S. national security and the U.S. financial system from illicit use and provide essential information to national security, intelligence, and law enforcement agencies; state, local, and Tribal officials; and financial institutions to help prevent drug traffickers, fraudsters, corrupt actors such as oligarchs, and proliferators from laundering or hiding money and other assets in the United States.”
- Reporting Companies:
1. Domestic reporting companies: companies formed under U.S. state laws; and
2. Foreign reporting companies: companies formed under the laws of a foreign country and registered to do business in the U.S.
- Information to be reported:
1. Beneficial owners of the entity; and
2. Individuals who have filed an application to create the entity or register the entity to do business.
- Effective Date:
1. FinCEN starts accepting BOI report as of January 1, 2024;
2. Reporting companies created or registered before January 1, 2024 must file the initial report by January 1, 2025;
3. Reporting companies created or registered after January 1, 2024, and before January 1, 2025, must file the initial report within 90 days after creation or registration;
4. Reporting companies created or registered after January 1, 2025, must file the initial report within 30 days after creation or registration; and
5. Both existing and new reporting companies must file updated BOI within 30 days of a change in such information.
I. Who Needs to Report?
The Reporting Rule requires all companies that (i) meet the definition of “reporting companies” and (ii) not eligible for an exemption to file BOI reports with FinCEN.
Definition of “Reporting Company”
“Reporting company” means either a domestic reporting company or a foreign reporting company:
- A “domestic reporting company” is any entity that is a corporation, limited liability company (LLC), or other entity formed by the filing of a document with a secretary of state or similar office under the law of a state or Indian tribe.
- A “foreign reporting company” is any entity that is a corporation, limited liability company, or other entity formed under the law of a foreign country, and registered to do business in any state or tribal jurisdiction by the filing of a document with a secretary of state or similar office under the law of the state or Indian tribe.
FinCEN expects that the definition above would capture limited liability partnerships, limited liability limited partnerships, business trusts, and most limited partnerships. Legal entities that are not created by the filing of formation documents, including certain trusts, are currently excluded from the definition of “reporting company” and not subject to the Reporting Rule.
Exemptions
The Reporting Rule exempts certain entities from the reporting requirements, including:
1. Securities reporting issuer
2. Governmental authority
3. Bank
4. Credit union
5. Depository institution holding company
6. Money services businesses
7. Broker or dealer in securities
8. Securities exchange or clearing agency
9. Other Exchange Act registered entity
10. Investment company or investment adviser
11. Venture capital fund adviser
12. Insurance company
13. State-licensed insurance producer
14. Commodity Exchange Act registered entity
15. Accounting firm
16. Public utility
17. Financial market utility
18. Pooled investment vehicle
19. Tax-exempt entity
20. Entity assisting a tax-exempt entity
21. Large operating company
22. Subsidiary of certain exempt entities
23. Inactive entity
Additionally, if an entity meets the criteria of item 18 above (pooled investment vehicle) and is formed under the laws of a foreign country, the entity is subject to a separate reporting requirement as discussed below.
II. Identification of Beneficial Owner and Company Applicant
The Reporting Rule requires reporting companies to report certain information about their beneficial owners and company applicants.
Beneficial Owner
The Reporting Rule defines “beneficial owner” as any individual who, directly or indirectly, either:
- exercises substantial control over a reporting company; or
- owns or controls at least 25 percent of the ownership interests of a reporting company.
An individual exercises substantial control over a reporting company if he or she:
- is a senior officer of the reporting company;
- has authority to appoint or remove certain officers or a majority of directors of the reporting company;
- is an important decision-maker of the reporting company; or
- has any other form of substantial control over the reporting company.
Ownership interest of a reporting company includes:
- equity, stock, or voting rights;
- a capital or profit interest;
- convertible instruments;
- options or other non-binding privileges to buy or sell any of the foregoing; and
- any other instrument, contract, or other mechanism used to establish ownership.
Certain individuals are excluded from the definition of “beneficial owner,” including minor children, certain nominees, intermediaries, custodians, or agents, and certain employees, etc. The Reporting Rule provides for special reporting requirements for individuals who meet the “beneficial owner” definition but for the foregoing exceptions.
Company Applicant
The Reporting Rule requires certain reporting companies to report information about their “company applicants,” including:
- for a domestic reporting company, the individual who directly files the document that creates the domestic reporting company;
- for a foreign reporting company, the individual who directly files the document that first registers the foreign reporting company; and
- irrespective of a domestic or a foreign reporting company, the individual who is primarily responsible for directing or controlling such filing if more than one individual is involved in the filing of the document.
Reporting companies created or registered before January 1, 2024 do not need to report the company applicant information. The Reporting Rule also does not require any update to the company applicant information for reporting companies formed or registered after January 1, 2024.
III. Information to be Included in Initial Report
General Requirements
The reporting rule requires the following information to be included in a reporting company’s initial report:
- For the reporting company:
1. Full legal name
2. Any trade name or “doing business as” (DBA) name
3. Complete current U.S. address
4. Jurisdiction of formation
5. For foreign reporting companies only: jurisdiction of first registration
6. Internal Revenue Service (IRS) Taxpayer Identification Number (TIN) (including an Employer Identification (EIN)).
For foreign reporting companies that do not have a TIN, tax identification number issued by a foreign jurisdiction and the name of such jurisdiction.
- For each beneficial owner and company applicant (if applicable):
1. Full legal name
2. Date of birth
3. Complete current address
4. Unique identifying number and issuing jurisdiction from, and image of one of the following, non-expired documents:
（1）U.S. passport
（2）State driver’s license
（3）Identification document issued by a state, local government, or Indian tribe
（4）For individuals who do not have any of the above, foreign passport
Special Rules
The Reporting Rule contains certain special rules that affect certain reporting companies’ reporting obligations. For example:
- companies that are foreign pooled investment vehicles, which would be a reporting company but for the pooled investment vehicle exemption discussed above, must report one individual who exercises substantial control over the company;
- the beneficial ownership information requirement is altered for reporting entities:
1. owned by exempt entities; or
2. whose beneficial owner is a minor child; and
- a reporting company may report another entity’s FinCEN identifier and full name in lieu of the beneficial owner and company applicant information outlined above, if:
1. the other entity has obtained a FinCEN identifier and provided that FinCEN identifier to the reporting company;
2. an individual is or may be a beneficial owner of the reporting company by virtue of an interest in the reporting company that the individual holds through an ownership interest in the other entity; and
3. the beneficial owners of the other entity and of the reporting company are the same individuals.
IV. Compliance Timeline and Non-Compliance Consequences
Reporting companies (whether foreign or domestic) created or registered before January 1, 2024, will have one year after the effective date (until January 1, 2025) to file their initial reports.
Reporting companies formed or registered on or after January 1, 2024, and before January 1, 2025, must submit an initial report within 90 days of the date (1) the reporting company receives actual notice that its creation or registration has become effective; or (2) a secretary of state or similar office first provides public notice that the reporting company has been created.
Reporting companies formed or registered on or after January 1, 2025, must submit an initial report within 30 days of the date (1) the reporting company receives actual notice that its creation or registration has become effective; or (2) a secretary of state or similar office first provides public notice that the reporting company has been created.
Reporting companies must report changes to the information in their previously-filed report within 30 days, and correct inaccurate information in previously-filed reports within 30 days of when the reporting company becomes aware or has reason to know of the inaccuracy of such information.
Pursuant to the CTA, any willful violation of the BOI reporting requirements can lead to civil or criminal penalties, including (1) civil penalties of up to $500 per day a violation has not been remedied; and (2) criminal penalties of up to $10,000 and/or imprisonment of up to two years.
V. What’s Next?
Companies potentially subject to the Reporting Rule, including those formed in or registered to do business in the U.S., should start identifying beneficial owners and start collecting requisite information. Companies should also review the FAQ (https://www.fincen.gov/boi-faqs) and Small Entity Compliance Guide (https://www.fincen.gov/boi/small-entity-compliance-guide), which comes in various languages, including traditional and simplified Chinese, published by FinCEN, which provide helpful guidance on compliance with the Reporting Rule.
Nevertheless, the Reporting Rule’s broad language leads to many uncertainties on the application of the rule, and FinCEN has indicated that it expects to publish additional guidance in the future. Therefore, reporting companies are also encouraged to continue monitoring the Reporting Rule and review any additional clarifications provided by FinCEN.
In light of the implementation of this brand new beneficial ownership reporting regime and the adverse consequence of non-compliance, we encourage you to reach out to your usual KWM contacts for further information and assistance.
Disclaimer:
This client alert is prepared for general information only. It is not a comprehensive analysis of the matters presented, and is not intended and should not be relied upon as legal advice. We disclaim any responsibility or liability to anyone, irrespective of past, current or potential client relationship, in connection with this client alert.
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