The new BOI requirement (Beneficial Ownership Information) enacted by the US Congress in 2021 has attracted significant attention. In this article, I delve into what BOI is, why it was requested, how companies can comply, and other pertinent considerations for businesses navigating this new requirement.
What is BOI?
Beneficial Ownership Information (BOI) refers to the details about individuals who own or control a company. This includes information on those who hold significant stakes, have substantial control over business decisions, or benefit from the company’s assets and profits. BOI typically includes names, addresses, dates of birth, and details of ownership or control interests.
Why Was the BOI Requirement Requested?
The introduction of the BOI requirement stems from a global push towards greater financial transparency and the prevention of illicit activities such as money laundering, tax evasion, and terrorism financing. By mandating the disclosure of beneficial ownership information, authorities aim to create a more transparent business environment, making it harder for bad actors to hide their identities and illicit activities behind complex corporate structures.
The BOI is part of the Corporate Transparency Act (CTA) in the United States, enacted in January 2021. This legislation aims to modernize and enhance the country’s anti-money laundering (AML) regime, aligning with international standards set by organizations such as the Financial Action Task Force (FATF).
How to Comply with the BOI Requirement
Compliance with the Beneficial Ownership Information requirement involves several steps:
Identify Beneficial Owners: Companies must identify individuals who meet the criteria of beneficial owners. Typically, this includes anyone who owns 25% or more of the company or has substantial control over its operations.
Collect Required Information: Gather the necessary information for each beneficial owner, including their name, date of birth, address, and identification numbers (such as Social Security or passport numbers).
Submit Information to Authorities: Companies must submit the collected information to the Financial Crimes Enforcement Network (FinCEN). This can be done through an online portal specifically designed for BOI submissions.
Maintain Accurate Records: Businesses must keep their BOI records up to date. Any changes in ownership or control must be reported promptly to ensure compliance.
Ensure Privacy and Security: While transparency is crucial, companies must also ensure that the personal information of beneficial owners is protected against unauthorized access and misuse.
Additional Considerations
Conclusion
The new Beneficial Ownership Information requirement represents a significant step towards enhancing financial transparency and combating illicit activities. While compliance may present challenges, especially for smaller businesses, the benefits of a transparent business environment are substantial. By understanding what BOI is, why it was requested, and how to comply, US companies can navigate this new requirement effectively and contribute to a more transparent and secure financial system.
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