PHILADELPHIA—The Financial Crimes Enforcement Network (FinCEN) has issued guidance to customers of financial institutions about reporting beneficial ownership information (BOI).
The guidance notes that many small businesses will have to report BOI to FinCEN pursuant to the Corporate Transparency Act (CTA) and will also have to provide BOI to their financial institutions pursuant to a separate federal requirement.
The guidance also details some of the differences in the BOI that must be reported to FinCEN and the BOI that is collected by financial institutions.
The Key Points
According to Wolters Kluwer, among the key points in the guidance:
- An entity may potentially have to provide BOI to both FinCEN and a financial institution. “For example, if an entity seeks to open a bank account, the bank may be required to request certain information about the entity’s beneficial owner(s) before the account can be opened,” Wolters Kluwer said. “That information is collected by the bank when fulfilling its Federal customer due diligence obligations. That same entity may separately be a ‘reporting company’ under the CTA that is required to report BOI to FinCEN.”
- If an entity is required to report BOI to FinCEN, that requirement cannot be fulfilled by providing BOI to a financial institution.
Different Data Collected
“FinCEN and financial institutions do not collect the exact same types of BOI,” Wolters Kluwer said in a statement. “For example, financial institutions are required to collect social security numbers of beneficial owners, but social security numbers are not required to be reported to FinCEN. Company applicant information is required to be reported to FinCEN (for reporting companies created or registered in 2024 or beyond) as well as all dba names used by the company, while financial institutions are not required to collect that information.”
Different Definitions
In addition, Wolters Kluwer noted there are some differences in how a “beneficial owner” is defined for the purposes of FinCEN reporting and financial institution collection, although both have a “control prong” and an “ownership prong.”
The company noted there is no maximum number of beneficial owners who must be reported to FinCEN. However, under the “control prong,” a financial institution is only required to collect information about one individual, Wolters Kluwer added. “Under the “ownership prong,” a financial institution may be required to collect information for up to four individuals, Wolters Kluwer said.
Additional Guidance
Wolters Kluwer also cited FinCEN guidance that the CTA requires FinCEN revise its customer due diligence requirements.
Additional information is available here.