This blog is part of a greater series on the Corporate Transparency Act as regulations and guidance are still being developed. NCBA CLUSA will publish updates and additional information as it becomes available.
On January 1, 2024, new reporting requirements for U.S. businesses—including cooperatives—to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) will go into effect. The Corporate Transparency Act was passed as part of the Anti-Money Laundering Act of 2021 with the purpose of combatting money laundering, tax fraud and other illicit activities within U.S. businesses. On September 30, 2022, FinCEN published the final rule to establish the “Beneficial Ownership Information (BOI) Reporting Requirements.” Starting January 1, 2024, new businesses must file a BOI report within 90 days of registration. However, existing businesses have until January 1, 2025 to comply.
As democratically owned and governed businesses, cooperatives will need to pay close attention to the FinCEN guidance to determine whether they need to file a BOI report. Domestic Companies and Foreign Companies operating in the U.S. must file unless they fall into one of the exempt categories below. Individuals and businesses that willfully violate reporting requirements may face up to $500/day and $10,000 in fines or imprisonment. Resources like the Small Entity Compliance Guide and FAQ page will provide the latest information from Treasury.
Companies that are NOT required to file
- Large operating companies that meet all three requirements below:
– Employ more than 20 full-time employees;
– Generate more than $5 million in revenue or sales; and
– Have an operating presence at a physical office within the U.S.
- Exempt companies and their subsidiaries, including all 501(c) nonprofits, public utilities, banks, credit unions and more listed at the bottom of the page
Definition of “Beneficial Owner”
- Any individual who directly or indirectly exercises substantial control over the company
OR
- Any individual who owns or controls at least 25% of a company
Based on the regulations, co-ops that are not exempt from filing a BOI report must provide the required information for the Board of Directors and senior officers, such as the president, CEO or general manager. There is no annual filing requirement; however, if any individuals in these positions change, businesses will have 30 days to update their BOI report.
Required Information for Beneficial Owners
FinCEN will launch the Beneficial Ownership Secure System (BOSS) on January 1, 2024. Businesses formed beginning in 2024 will need to complete a filing for the company itself AND the beneficial owners. Beneficial Owners must provide the following information:
- Full Legal Name
- Date of Birth
- Residential Address
- Non-expired Form of Identification (Any Government issued passport, U.S. Government Issued Driver’s License, or ID)
What are the Exemptions?
- SEC reporting issuers
- Governmental authorities
- Banks
- Credit unions
- Depository institution holding companies
- Money services businesses (money transmitters)
- Securities exchanges or clearing agencies
- Brokers or dealers in securities
- Other Exchange Act registered entities
- Investment companies or investment advisers
- Venture capital fund advisers
- Insurance companies
- State-licensed insurance producers
- Commodity Exchange Act registered entities
- Accounting firms
- Public utilities
- Financial market utilities
- Pooled investment vehicles
- Tax-exempt entities
- Entities providing services to tax-exempt entities
- Large operating companies
- Subsidiaries of certain exempt entities
- Inactive entities