For more information about FinCEN BOI reporting, please see: FinCENguidance.com
A FinCEN Identifier is a unique identifying number issued by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury. This identifier plays a crucial role in the implementation of the Corporate Transparency Act (CTA), part of the Anti-Money Laundering Act of 2020.
Purpose of the FinCEN Identifier
Enhanced Transparency in Entity Ownership: The CTA aims to crack down on the use of shell companies for illicit activities. By requiring certain companies to report their beneficial owners to FinCEN, the law seeks to prevent money laundering, terrorism financing, and other financial crimes.
Simplified Reporting Requirements: The FinCEN Identifier simplifies reporting requirements for entities. Once an entity obtains a FinCEN Identifier, it can provide this number in lieu of furnishing detailed beneficial ownership information in future filings.
Ease of Compliance for Businesses: For businesses required to report ownership information under the CTA, the FinCEN Identifier streamlines the process, reducing the administrative burden and complexity.
Obtaining a FinCEN Identifier Entities and individuals eligible to report to FinCEN under the CTA can apply for a FinCEN Identifier. This includes:
Reporting Companies: Typically, smaller, privately-owned corporations, LLCs, and similar entities that do not publicly report to the Securities and Exchange Commission (SEC).
Beneficial Owners: Individuals who own or control a significant portion (usually 25% or more) of these companies, or who exercise substantial control over them.
How to get a FinCEN ID:
Individuals will be able to request a FinCEN identifier on or after January 1, 2024, by completing an electronic web form. Individuals will need to provide their full legal name, date of birth, address, unique identifying number and issuing jurisdiction from an acceptable identification document, and an image of the identification document. After an individual submits this information, the individual will immediately receive a FinCEN identifier unique to that individual.
Reporting companies may request a FinCEN identifier by checking a box on the beneficial ownership information report when they submit the report. After the reporting company submits the report, the reporting company will immediately receive a FinCEN identifier unique to that company. If a reporting company wishes to request a FinCEN identifier after submitting its initial beneficial ownership report, it may submit an updated beneficial ownership information report requesting a FinCEN identifier, even if the company does not otherwise need to update its information.
Check FinCEN.gov for more information.
Implementation and Compliance The CTA and the FinCEN Identifier system represent a significant shift in the U.S. approach to corporate transparency. Compliance involves understanding the nuances of the law, determining eligibility, and meeting reporting deadlines. Privacy Concerns While enhancing transparency, the CTA and FinCEN also consider privacy and security concerns. Access to the detailed ownership information collected is restricted and only available under specific circumstances to law enforcement and financial institutions performing due diligence. The FinCEN Identifier is an integral part of a broader effort to increase transparency in business ownership and combat financial crimes. It signifies a balance between the need for greater corporate transparency and the protection of individual privacy and business information.