BOIR Filing Explained: Who Must Submit the Report 

In the ever-evolving landscape of business regulations, compliance is crucial for organisations to ensure transparency and avoid legal pitfalls. One such requirement that has gained prominence in the United States is the Beneficial Ownership Information Report (BOIR). This article explores what BOIR is, who must file it, and why it is a critical aspect of maintaining corporate accountability.

What is BOIR?

The Beneficial Ownership Information Report (BOIR) is a regulatory filing mandated by the Corporate Transparency Act (CTA), enacted as part of the Anti-Money Laundering Act of 2020. The BOIR is designed to improve corporate transparency and prevent illicit activities such as money laundering, tax evasion, and terrorism financing.

The CTA requires certain entities to disclose information about their beneficial owners — individuals who exercise substantial control over the company or own at least 25% of its equity. This information is reported to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, which maintains a secure database of this information.

Why is BOIR Important?

BOIR aims to:

1. Combat Financial Crimes: By identifying the individuals behind corporate entities, the government can better track and mitigate activities like money laundering and tax evasion.
2. Enhance Transparency: Ensuring companies operate transparently fosters trust in the business environment.
3. Streamline Compliance: The centralized database maintained by FinCEN simplifies due diligence for financial institutions and law enforcement agencies.

Failure to comply with BOIR requirements can result in significant penalties, including fines and potential imprisonment for willful non-compliance.

Who Must File the BOIR?

The filing requirement for BOIR applies to entities defined as “reportable companies” under the CTA. These include:

1. Corporations: Any corporation formed under the laws of a U.S. state or foreign corporation registered to do business in the U.S.
2. Limited Liability Companies (LLCs): Domestic and foreign LLCs registered to operate in the U.S. must file the report.
3. Other Entities: Other business structures created through state filings, such as limited partnerships or statutory trusts, may also fall under this category.

Exemptions from BOIR Filing

While the BOIR covers a wide range of entities, certain organizations are exempt due to their nature or existing regulatory oversight. These exemptions include:

1. Publicly Traded Companies: Companies listed on U.S. stock exchanges are exempt due to existing disclosure requirements.
2. Banks and Credit Unions: These entities are already heavily regulated and provide ownership information to federal agencies.
3. Charitable and Nonprofit Organizations: Nonprofits are typically excluded unless they engage in for-profit activities.
4. Inactive Entities: Companies that have ceased operations, have no assets, and meet specific inactivity criteria may also be exempt.

What Information Must Be Reported?

Reportable companies are required to disclose the following information about each beneficial owner:

1. Full Legal Name: The complete name of the individual.
2. Date of Birth: The owner’s birth date for identification purposes.
3. Residential Address: The primary residence of the owner.
4. Identification Document: A copy of a government-issued photo ID (e.g., passport, driver’s license).

In addition to beneficial owners, companies must also report similar information for the “company applicant,” the individual responsible for filing the formation or registration documents.

How and When to File BOIR

The BOIR must be submitted electronically through FinCEN’s secure filing system. The deadlines for submission vary based on the entity’s status:

1. Existing Entities: Companies formed or registered before January 1, 2024, must file BOIR by January 1, 2025.
2. New Entities: Entities formed or registered on or after January 1, 2024, must file the BOIR within 30 days of formation or registration.

Failure to meet these deadlines may result in penalties, emphasizing the importance of timely compliance.

What Happens After Filing?

Once the BOIR is submitted, FinCEN reviews the report and adds the information to its secure database. This database is accessible only to authorized parties, including:

1. Law Enforcement Agencies: Federal, state, and tribal law enforcement can access the data for investigations.
2. Financial Institutions: Banks and other financial entities can request access to perform due diligence.
3. Government Regulators: Agencies overseeing compliance with anti-money laundering laws may also access the data.

It is crucial to note that the information in the database is not publicly available, ensuring confidentiality while serving regulatory and law enforcement purposes.

Penalties for Non-Compliance

Non-compliance with BOIR requirements can lead to severe penalties, including:

1. Civil Penalties: Fines of up to $500 per day for each day the violation continues.
2. Criminal Penalties: Willful violations can result in fines of up to $10,000 and imprisonment for up to two years.

To avoid these consequences, companies must ensure they understand their obligations and file accurate and timely reports.

Tips for Complying with BOIR Requirements

To navigate BOIR compliance effectively, consider the following tips:

1. Identify Beneficial Owners Early: Determine who meets the criteria for beneficial ownership within your organization.
2. Maintain Accurate Records: Keep detailed records of ownership and control structures to facilitate reporting.
3. Leverage Professional Assistance: Consult with legal or compliance experts to ensure your filings meet regulatory standards.
4. Monitor Regulatory Changes: Stay informed about updates to BOIR requirements to avoid unintentional non-compliance.

Conclusion

The Beneficial Ownership Information Report (BOIR) represents a significant step toward enhancing corporate transparency and combating financial crimes in the United States. By understanding who must file the report and adhering to the filing requirements, businesses can contribute to a more transparent and trustworthy economic environment.

For more information or assistance with BOIR compliance, visit BOIR.org, your trusted partner in navigating the complexities of regulatory compliance. Together, we can build a business landscape defined by accountability and integrity.