Beneficial Ownership Information (BOI) Reports: The Basics

Understanding BOI Reports

The Corporate Transparency Act (CTA) was enacted as part of the Anti-Money Laundering Act of 2020. Aimed at curbing illicit activities such as money laundering, tax evasion, and financing of terrorism, the CTA mandates that certain companies disclose detailed information about their beneficial owners and controlling persons. These Beneficial Ownership Information (BOI) reports, which must be filed with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, require certain companies to provide the identities of individuals who exercise substantial control over the entity or own at least 25% of it.

The CTA reporting requirements became effective in 2024. Entities formed prior to 2024 have until the end of 2024 to file a report. Entities formed in 2024 have 90 days from formation to file the BOI report.  Beginning in 2025, entities have 30 days from formation to file a BOI report.

What is a BOI Report?

A BOI report details the individuals who ultimately own or control a company. This information includes personal details of the beneficial owners such as their name, address, date of birth, and other identification numbers such as a driver’s license or passport number. Images of the id are also included in the report. The report also includes information regarding the reporting company, as well as the company applicant (often an attorney or compliance company that filed formation documents). The primary goal of collecting BOI is to help authorities track illicit activities and enhance the integrity of the financial system.

Who Needs to be Listed in a BOI Report?

Under the Corporate Transparency Act, a BOI report must include information about:

1. Beneficial Owners:

   • Individuals who hold 25% or more of the equity interests or voting power in the entity. This threshold ensures that significant owners who have substantial control or influence over the entity are disclosed.

2. Controlling Persons:

   • Individuals who exercise substantial control over the entity, regardless of their equity stake. This includes senior officers (such as the CEO or president), those who have authority over significant decisions, and any other individual who regularly performs similar functions.

When Should BOI Reports Be Amended?

BOI reports must be amended within 30 days under the following circumstances:

1. Change in Beneficial Ownership:

   • If there is a change in the individuals who are beneficial owners of the entity (those holding 25% or more equity or voting power), an amendment is required. This could happen due to the sale of ownership interests, the addition of new owners, or the departure of current owners.

2. Change in Controlling Persons:

   • If there is a change in the individuals classified as controlling persons, an amendment is necessary. This can occur with changes in senior management or shifts in who holds significant decision-making power.

3. Change in Beneficial Owners’ Information:

   • Any change in the details of the beneficial owners or controlling persons, such as a change in name, residential address, or contact information, necessitates an update to the BOI report.

4. Entity Information Changes:

   • If there are changes to the entity itself, such as a change in the entity’s address or name (including trade names or “dba’s”), an amendment to the BOI report is required.

Why Amend BOI Reports?

1. Compliance with Legal Requirements:

   • FinCEN regulations mandate that BOI reports be accurate and up-to-date. Failing to amend a report when there are changes can result in legal consequences, including fines and penalties.

2. Enhancing Financial Transparency:

   • Accurate BOI reports ensure that law enforcement and regulatory agencies have the correct information to identify and investigate illegal activities, thereby promoting financial transparency.

3. Avoiding Penalties:

   • By promptly amending BOI reports, entities can avoid the risk of penalties associated with non-compliance. FinCEN can impose significant fines on entities that fail to maintain accurate and current BOI information.

4. Maintaining Business Integrity:

   • Keeping BOI reports up-to-date reflects a commitment to corporate governance and ethical business practices, which can enhance the reputation of the entity in the eyes of regulators, investors, and the public.

How to Amend a BOI Report?

Amending a BOI report involves the following steps:

1. Identify the Changes:

   • Determine the exact changes that need to be reported. This could involve gathering updated information from new beneficial owners or verifying changes to existing details.

2. Prepare the Amendment:

   • If you are a Patriot Compliance client, use our guided tool on our website.

   • If you are not a Patriot Compliance client, complete the necessary forms as specified by FinCEN, providing the updated information. Ensure that all required fields are accurately filled out to avoid delays.

3. Submit the Amendment:

   • If you are a Patriot Compliance client, you can finalize, approve and submit the amendment directly from our website.

   • If you are not a Patriot Compliance client, submit the amended report to FinCEN through the appropriate channels, typically via their online reporting system.

4. Keep Records:

   • The Patriot Compliance web portal maintains your filings and amendments as long as you are a client.

   • If you are not a Patriot Compliance client, you should maintain records of the changes and the submitted amendments for future reference and to demonstrate compliance.

Amending BOI reports with FinCEN is a critical responsibility for entities to ensure compliance, enhance transparency, and avoid penalties. Entities should establish procedures to monitor changes in beneficial ownership and controlling persons, ensuring timely updates to their BOI reports. By doing so, they contribute to a robust and transparent financial system while safeguarding their own operational integrity.

Patriot Compliance can assist with all BOI filings and amendments, streamlining the process through our web application and portal, and saving our clients hours of time.

For More Information, Contact us.