Financial Crime World

Understanding Beneficial Ownership Information (BOI) Requirements

What is the Beneficial Ownership Information (BOI) Final Rule?

The Beneficial Ownership Information (BOI) Final Rule, issued by FinCEN, aims to combat illicit activity by requiring reporting companies to identify and disclose beneficial ownership information. This FAQ provides key points and practical considerations for financial institutions and companies in the United States.

Definitions

Beneficial Owner

  • Any individual who directly or indirectly exercises substantial control over a reporting company or owns/controls 25% or more of its ownership interests.
  • Substantial control refers to the power an individual has over a reporting company, particularly in directing or influencing important decisions.

Key Requirements

  1. Reporting companies must identify all individuals with substantial control over them.
  2. Companies that report beneficial ownership information will contribute to preventing bad actors from hiding or benefiting from their ill-gotten gains.

Access and Security

  • FinCEN’s BOSS system will store reported beneficial ownership information and only be accessible by specific requesters, including U.S. federal agencies, state/local law enforcement, financial institutions with customer consent, and foreign authorities.
  • Persons accessing the system will be subject to strict access requirements and safeguards.

Practical Considerations

  1. Financial institutions may use FinCEN’s BOSS system to review beneficial ownership information for customer due diligence purposes, but should plan for how they will ensure such information is kept secure and safeguarded.
  2. Companies must determine whether they are subject to FinCEN’s reporting requirements or exempt under specific circumstances.
  3. If a company is subject to the reporting requirements, it should begin gathering information about its beneficial owners, which may be a time-consuming process.

Conclusion

Understanding and complying with FinCEN’s BOI Final Rule is crucial for financial institutions and companies in the United States. By identifying beneficial ownership information, these entities can play a vital role in preventing illicit activity and promoting transparency in business dealings.