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Effective Jan 1, 2024 FINCEN Beneficial Ownership Reporting Requirement

Effective January 1, 2024, the U.S. Treasury’s Financial Crimes Enforcement Network (FINCEN) will be implementing the Beneficial Ownership Reporting requirement as part of the bipartisan Corporate Transparency Act. This regulation is designed to enhance transparency, combat illicit financial activities, and safeguard national security by requiring corporations and entities to report information about their beneficial owners.

Entities subject to these requirements include corporations, LLCs, LPs, and trusts formed by filing with the Secretary of State or a similar office. This also applies to foreign entities registering to do business within the United States under the laws of another country.

Entities engaged in highly regulated industries (e.g., insurance, banks), tax-exempt entities (e.g., non-profits), and certain large operating companies may be exempt from these requirements, though the exemption can vary based on the business structure.

Information on Beneficial Owners:
Beneficial owners are those who exercise substantial control or own/controls 25% or more of the ownership interests. Required information for beneficial owners includes full legal name, date of birth, current physical address, and a unique identifying number along with an image of specific identification documents.

1. Effective Date: The rule becomes effective on January 1, 2024.

2. Initial Reporting Deadline: Companies created or registered before January 1, 2024, will have one year, until January 1, 2025, to file their initial reports. Companies created or registered after January 1, 2024, will have 90 days after their creation or registration to file their initial reports.

3. Ongoing Reporting: After the initial report, both existing and new reporting companies will be required to file updates within 30 days of any changes in their beneficial ownership information.

Penalties for Non-Compliance:
Non-compliance with the Corporate Transparency Act may lead to severe consequences. These penalties include:

– Civil fines of up to $500 per day for as long as the violation persists.
– Potential criminal penalties, including fines of up to $10,000 and imprisonment for up to two years, or a combination of both.

KSDT understands the importance of staying informed and compliant with regulatory changes, and we are committed to assisting you through this transition. Please do not hesitate to reach out to us with any questions or concerns you may have regarding the FINCEN Beneficial Ownership Reporting requirement.

Nonetheless, assisting you with your compliance with the Corporate Transparency Act, including beneficial ownership information reporting, is not within the scope of our existing engagement(s) with you. You have sole responsibility for your compliance with the CTA, including its BOI reporting requirements and the collection of relevant ownership information. We shall have no liability resulting from your failure to comply with CTA.

However, we are here to support you every step of the way.