What Are the FinCEN Fines, Deadlines, and Requirements?
The FinCEN fine includes both a civil money penalty and criminal penalties. A civil money penalty can cost individuals up to $591 or more daily. Criminal fines can reach up to $10,000.
Businesses will have until January 1st, 2025 to file their initial beneficial ownership information (BOI) report.
Important Note: on Dec. 3, 2024, a Federal judge ruled that these new FinCEN filing requirements are unconstitutional and not required to report for the time being. However, this ruling could be overruled, so some small business owners continue registering anyway. Read on to learn more about this.
What Is FinCEN Fine?
The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Treasury Department. They’re responsible for implementing regulations that reduce financial crime. FinCEN will be enforcing the Corporate Transparency Act.
The Corporate Transparency Act was passed in 2021. It’s an anti money laundering act designed to make it harder for bad actors to hide or disguise wealth and suspicious transactions behind shell companies and other similar business structures.
It’s a part of broader BSA compliance.
With it, any major financial institution or organization that may need to access this information to defend against financial crimes can do so.
This is achieved through beneficial ownership information. You have to report information about those who indirectly own or control a company. A beneficial owner is defined as anyone who has substantial control and/or ownership interests. All beneficial owners must be reported.
What happens if you don’t report beneficial ownership information? That’s when the FinCEN fine is activated.
FinCEN fines come in two forms: a civil money penalty and criminal penalties.
- A civil penalty may reach up to $500 each day the violation continues. A civil monetary penalty will be adjusted with inflation.
- Criminal penalties may include up to two years in prison and a fine of up to $10,000.
You are subject to penalties if you willfully violate the BOI reporting requirements. You don’t have to be engaging in money laundering. A “willful violation” can entail several activities.
Willfully violating by reporting false information to avoid getting caught while money laundering is certainly one scenario, you can also get fined for:
- Willfully failing to file a BOI report
- Willfully failing to correct wrong information
- Willfully failing to update sensitive information
The Bank Secrecy Act Requirements and Deadlines
Understanding whether you are required to report under the new Corporate Transparency Act can be fairly complex.
To boil it down, you must report if:
- You are a corporation (including S-corp), LLC, or other business entity created by filing a document with a secretary of state or similar office in the United States.
- You don’t fall under any of the exempt categories. There are 23 types of exempt entities. For example, financial services are often exempt.
Their BOI Small Compliance Guide offers extensive guidance as well as a checklist to see whether your company needs to report.
They also cover inactivity (discussing financial accounts and more), foreign companies with foreign bank transactions, enforcement action, and more on their official websites.
Companies formed before January 1st, 2024 will need to file by January 1st, 2025.
If your company was formed in 2024, you will have 90 calendar days after notice of effective creation or registration to file.
If your company is formed on or after January 1st, 2025, you will have 30 calendar days after notice of effective creation or registration to file.
Details on How to Comply
The FinCENs office has a dedicated website for BOI filing.
Once you’ve read the above guide and looked at the step-by-step process, you can then visit their BOI Filing System. You can also simplify the process by getting a FinCEN Identifier.
They offer extensive support and guidance. They also offer additional information and alerts that could affect when you need to file. Compliance is key to making sure you’re not engaging in a financial crime.
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