Dear [Beneficial Owner Name]:
Starting in 2024 newly formed, corporations, limited liability companies (LLCs), limited partnerships, and other entities that file formation papers with a state’s Secretary of State’s office (or similar government agency) must file a ‘Beneficial Ownership Information’ report with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) providing specified information regarding the entity’s ‘beneficial owners’. Entities in existence prior to January 1, 2024, must begin filing these reports on January 1, 2025.
[Name of Reporting Company] meets the requirements mandating the filing of a Beneficial Ownership Information report to FinCEN. For entities formed prior to January 1, 2024, the initial report must be filed by January 1, 2025. For entities formed after January 1, 2024, the initial report must be filed within 30 days of formation.
Should any of the reported information change or a beneficial ownership interest be sold or transferred, the entity must report this information within 30 days of the change or face the potential of having fines of up to $500 per day imposed, as well as the potential for criminal charges and fines of up to $10,000 and/or two years imprisonment. Changes include reporting a beneficial owner’s change of address or name, a new passport number when a passport is replaced or renewed or providing a copy of a renewed driver’s license.
Beneficial owners are broadly defined and involve owners who directly or indirectly own more than 25% of the entity’s ownership interests or exercise substantial control over the reporting company (even if they don’t actually have an ownership interest). While this may seem to only impact a few significant owners, it can encompass many senior officers of the business as well as those individuals who are involved in any significant business decisions (e.g., board members). Given the severity of the fines, we prefer to err on the side of overinclusion rather than under inclusion.
The types of information that must be provided (and kept current) for these beneficial owners include:
- the owner’s legal name
- residential address
- date of birth
- unique identifier number from a nonexpired passport, driver’s license, or state identification card.
The entity will also have to provide an image of any of these forms of documentation to FinCEN for all beneficial owners.
We have identified you to be a possible ‘beneficial owner’ of [Name of Reporting Company]. To ensure we remain compliant please provide us with the information listed above as soon as possible. In lieu of providing this information directly to us, you have the option of applying for a FinCEN identifying number. This will require you to provide your information directly to FinCEN and update it if your information changes. If you obtain a FinCEN identifying number you need only provide us with this number for our reporting purposes.
Please contact our office if you have any questions.
[Name of Reporting Company]