Tribal Entities Exempt from Beneficial Ownership Reporting Requirements
The Financial Crimes Enforcement Network (FinCEN) has clarified that tribally chartered corporations or state-chartered Tribal entities that control or wholly own the ownership interests of another entity are exempt from reporting requirements related to beneficial owners.
Clarification on Tribally Chartered Corporations and State-Chartered Tribal Entities
In a recent update, FinCEN emphasized that these exemptions apply only when the tribal corporation or state-chartered Tribal entity exercises direct or indirect control over the ownership interests of the other entity. The exemption does not extend to situations where the tribal corporation or state-chartered Tribal entity holds an ownership interest in the other entity but lacks control.
Accountants and Lawyers Not Typically Considered Beneficial Owners
In related news, FinCEN has also clarified that accountants and lawyers are generally not considered beneficial owners of a reporting company. This is because their roles typically involve providing general accounting or legal services to the company, which does not constitute “substantial control” over the entity.
However, if an accountant or lawyer holds a position with substantial authority within the company, such as serving as general counsel, they may be considered beneficial owners and subject to reporting requirements.
Special Reporting Rule for Exempt Entities
Additionally, FinCEN has introduced a special reporting rule that applies when a beneficial owner owns or controls their ownership interests in a reporting company exclusively through multiple exempt entities. In these situations, the names of all exempt entities holding the ownership interests may be reported to FinCEN instead of the individual beneficial owner’s information.
This special rule does not apply when an individual owns or controls ownership interests in a reporting company through both exempt and non-exempt entities. In such cases, the reporting company must report the individual as a beneficial owner if no exception applies, but the exempt companies do not need to be listed.
FinCEN’s Small Entity Compliance Guide
For more information on these exemptions and special reporting rules, businesses are encouraged to consult FinCEN’s Small Entity Compliance Guide. The guide provides detailed checklists and explanations to help small entities comply with FinCEN’s beneficial ownership reporting requirements.
Key Takeaways:
- Tribally chartered corporations or state-chartered Tribal entities that control or wholly own the ownership interests of another entity are exempt from reporting requirements.
- Accountants and lawyers are generally not considered beneficial owners unless they hold a position with substantial authority within the company.
- A special reporting rule applies when a beneficial owner owns or controls their ownership interests in a reporting company exclusively through multiple exempt entities.
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