FinCEN Updates on BOI Reporting Requirements – October 2024

In this article, we'll cover the recent FinCEN updates about accessing and reporting companies' information and a few detailed exemptions.

Stephanie Glanville | October 25, 2024 | Read time: 12 minute(s) | BOI Reporting, FinCEN Update | No Comments

On October 3, 2024, FinCEN introduced a few more essential FAQs for the BOI reporting requirements. These FAQs need to be known by everyone who is all qualified to file the BOI report with FinCEN. Knowing these new updates is essential for filing a report without missing any notable information.

In this article, we’ll cover the recent FinCEN updates about accessing and reporting companies’ information and a few detailed exemptions. This article will keep your company compliant with the recent regulatory rules and standards.

Let’s break down each update:

Accessing Beneficial Ownership Information

Can the beneficial ownership information reported to FinCEN be accessed through the Freedom of Information Act (FOIA)?

The beneficial ownership information reported to FinCEN cannot be accessed through the Freedom of Information Act (FOIA). Moreover, this information cannot be accessed by the public or any unauthorized individuals. Access is restricted to certain authorized persons who have a legitimate need for this information.

Reporting Requirements for Companies

Does a company have to file the BOI report every time it registers to conduct business in a new state?

According to the latest updates from FinCEN, a reporting company does not need to file the initial BOI report each time it registers to conduct business in a different state.

For example, a domestic reporting company created or registered on or after 2024 must submit the initial BOI report after receiving the public notice or the date on which the secretary of state or a similar office provides public notice, such as under the publicly accessible registry. A company does not need to file additional BOI reports in connection with subsequent filings with secretaries of state or similar offices that merely:

Authorize domestic companies registered in one state to do business in another state
Authorize foreign companies registered in one state to do business under the laws of another state.

Does the company converting from one corporate to another type create a new domestic reporting company that must file an initial BOI report?

Filing an initial BOI report depends on the law of the State or Indian Tribe and the type of entity undergoing the conversion. If the conversion results in creating a “new” domestic reporting company, then the company must file an initial BOI report with the current full legal company name. If a company undergoes a conversion but does not create a new reporting company, it is still required to submit an updated BOI report to FinCEN after the conversion.

For instance, if a company named “XYZ Corporation” converts to “XYZ LLC,” the company undergoes the conversion, and this change in business name may require filing an updated BOI report to reflect the new legal entity type. The company must ensure the report includes the current full legal name, “XYZ LLC,” following the conversion.

Reporting Company’s Ownership Criteria

What if the reporting company has no individuals who own or control at least 25% of the ownership interest?

FinCEN expects that one or more individuals will substantially control every reporting company and, therefore, that every reporting company will be able to identify and report at least one beneficial owner to FinCEN.

If one spouse has an ownership interest in a reporting company, is the other spouse considered a beneficial owner in a community property state?

Yes, possibly. In a community property state, the determination of beneficial ownership may depend on state laws. Suppose community property laws apply and spouses collectively own or control at least 25% of the reporting company’s ownership interests. In that case, both spouses should be reported to FinCEN as beneficial owners unless an exception applies.

Information Reported

What is an example of a valid identification document from a U.S. State, local government, or Indian Tribe?

A valid identification document from a U.S. State, local government, or Indian Tribe is a non-expired state-issued ID card, such as a driver’s license or state identification card. These documents serve as proof of identity and typically include a photograph of the holder. Some examples of non-expired documents include:

U.S. driver’s license
State-issued identification card
U.S. passport
Foreign passport (when the individual does not have any of the other three forms)

Are reporting companies required to report the addresses of beneficial owners or company applicants participating in an Address Confidentiality Program (ACP)?

Generally, the Address Confidentiality Program (ACP) is a program that provides duplicate addresses to individuals to secure the original address. This program keeps the address more confidential to reduce authorized access to someone’s location. Companies that need to report a beneficial owner or company applicant registered with a State’s ACP should submit the ACP address provided by the state to FinCEN. As a best practice, individuals participating in a State ACP may want to keep documentation verifying their program enrollment.

Does the name on an individual’s acceptable identification document need to match their current full legal name?

No, the name on the identification document of individuals (such as beneficial owners or company applicants) does not need to match their current full legal name. This may happen due to recent changes in their legal name. The individual should report their current full legal name to FinCEN. In addition, they should include an identification document in the BOI report that does not include the updated full legal name.

When a person obtains a new driver’s license or any other acceptable identification document that includes a change in name, address, or identifying number, the person needs to update and submit the updated BOI report with the updated information along with the new identification document.

Exemptions

Is a reporting company’s ownership interest partially owned by the exempt entity and partially controlled by the non-exempt entity qualify for the subsidiary exemption?

No, if a reporting company’s ownership interest is partially owned by an exempt entity and partially controlled by a non-exempt entity, the subsidiary does not qualify for the subsidiary exemption. To qualify, a subsidiary’s ownership interests must be fully 100 percent owned or controlled by one or more entities from exempt entities. In cases involving more than one exempt parent entity, the subsidiary exemption applies even if the parent entities are exempt from the BOI reporting requirements.

Does a reporting company qualify for the Pooled Investment Vehicle (PIV) exemption if it is operated or advised by an Exempt Reporting Adviser (ERA)?

Pooled Investment Vehicles (PIVs) are generally exempt from the BOI reporting process, but these exemptions apply only to PIVs operated or advised by certain types of entities. One such entity is a registered investment advisor with the Securities and Exchange Commission (SEC). If an investment advisor includes an exempt reporting adviser (ERA) that is not registered with the SEC, the PIV does not qualify for this exemption.

However, PIVs operated by ERAs that meet the criteria to qualify as a “venture capital fund adviser” are exempt from the reporting process. In contrast, PIVs operated by ERAs that qualify for other exemptions under the Investment Advisers Act do not receive an exemption from the reporting process.

Can a reporting company qualify for the large operating company exemptions if run from a personal residence?

The reporting company may qualify for the large operating company exemption if it meets the following criteria:

It must have more than 20 full-time employees in the United States.
It must have filed a federal income tax or information return demonstrating more than $5,000,000 in gross receipts or sales in the previous year.
It must have an operating presence at a physical location in the United States.

An “operating presence at a physical office” means that the entity regularly conducts its business at a location it owns or leases, distinct from the place of business of any other unaffiliated entity. Residences can qualify as physical offices if the company itself rents or owns the space used for the business and regularly conducts operations there.

Conclusion

In summary, these are some of the important updates from FinCEN about the BOI reporting requirements. These are essential to completing your BOI report without any mistakes or unwanted errors while preparing it. So, keep track of the new updates to meet your FinCEN compliance seamlessly.

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