The BOIR (Beneficial Ownership Information Reporting) refers to a legal requirement in the United States under the Corporate Transparency Act (CTA), which mandates that certain companies report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of the Treasury.

This legislation was passed as part of the Anti-Money Laundering Act in 2020 and is aimed at increasing transparency in corporate ownership to combat illicit activities such as money laundering, terrorist financing, and tax evasion.

The US system is similar to the UK’s register of People with Significant Control under which UK companies are obligated to record details of their beneficial ownership.

Key Elements of the BOIR:

1. Beneficial Owner Definition: A beneficial owner is any individual who directly or indirectly owns or controls at least 25% of a company or exercises significant control over the company through voting power or other means. It also includes individuals who control the company through other indirect means.
2. Reporting Requirements:
   • Companies must disclose information about their beneficial owners, including their names, addresses, dates of birth, and unique identifying numbers (such as from a passport or driver’s license).
   • This information must be reported to FinCEN when the company is formed or registered in the U.S., and updates must be made whenever there is a change in ownership or control.
3. Who Must Report:
   • The requirement primarily applies to small businesses (those with fewer than 20 employees, less than $5 million in gross receipts, and not regulated or otherwise exempted).
   • Exemptions: Large companies already subject to other reporting requirements (like publicly traded companies, regulated entities, and large operating companies) may be exempt from the reporting requirement.
4. Purpose:
   • The primary goal of the BOIR is to create a centralized database of beneficial ownership information to improve transparency and reduce the misuse of anonymous shell companies for illicit activities.
   • This system aims to assist law enforcement agencies, regulators, and financial institutions in tracing the true owners of companies.
5. Confidentiality:
   • The information reported to FinCEN is not publicly available. It is accessible only to authorized entities, such as law enforcement agencies, regulatory bodies, and financial institutions performing due diligence.

Why It Matters:

• Combatting Financial Crime: By requiring transparency around the true owners of companies, the BOIR is designed to make it harder for individuals to hide behind complex ownership structures to engage in illegal activities such as money laundering and fraud.
• Better Enforcement: The information helps regulators and law enforcement more effectively investigate and prosecute criminal activities, such as corruption or tax evasion.
• Improved Corporate Transparency: The BOIR helps to ensure that the individuals behind companies are identifiable, fostering accountability and trust in the corporate environment.

Implementation Timeline:

• As of 2024, companies are expected to begin filing their beneficial ownership information with FinCEN as part of their registration or incorporation process. Specific deadlines for compliance and reporting requirements will be established by FinCEN.

• Key Points About the BOIR:

  • Required by the Financial Crimes Enforcement Network (FinCEN) (Find out more here: https://boiefiling.fincen.gov/)
  • Applies to most U.S. businesses
  • Deadline for filing is January 1st, 2025
  • Failure to file can result in penalties of up to $592 per day

In summary, the BOIR under the Corporate Transparency Act is a measure designed to promote greater transparency and accountability in corporate ownership in the U.S., with the goal of deterring financial crime and ensuring that the true owners of companies are identifiable by law enforcement and financial institutions.

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