Failure to file a Beneficial Ownership Interest Report (aka “BOI Report”) with the Financial Crimes Enforcement Network (FinCEN) can result in significant penalties. These reports are required under the Corporate Transparency Act (CTA), which mandates that certain types of entities in the U.S. disclose their beneficial owners (the individuals who ultimately own or control a company).
Here are the potential penalties for non-compliance:
1. Civil Penalties
- Failure to file a report: A penalty of up to $500 per day for each day the report remains unfiled after the deadline.
- Failure to update a report: If a Beneficial Ownership Interest report is not updated when there is a change in ownership or control, the penalty can be up to $500 per day for each day the updated report is overdue.
These penalties can add up quickly if the violation is not addressed promptly.
2. Criminal Penalties
In cases of willful violations (e.g., knowingly falsifying information, intentionally failing to file the Beneficial Ownership Interest report), criminal penalties can be much more severe:
- A fine of up to $10,000.
- Potential imprisonment for up to 2 years.
3. Willful Failure or False Information
- If an individual or entity intentionally fails to comply with the CTA requirements or knowingly submits false information, they can be subject to both criminal penalties (including fines and possible jail time) and civil penalties.
4. Other Enforcement Measures
- The government may also pursue additional enforcement actions, such as restricting access to certain legal protections (e.g., the ability to bring lawsuits or defend against claims), depending on the severity of the violation.
Reporting Deadlines and Requirements
- New entities: Must file their Beneficial Ownership Report within 30 days of formation or registration.
- Existing entities: Must file their report by January 1, 2025 (for most entities), with updates required within 30 days of a change in beneficial ownership.
The Corporate Transparency Act is designed to make it more difficult for criminals to hide behind anonymous shell companies and improve transparency in corporate ownership. As such, compliance with the reporting requirements is important to avoid these significant penalties and contribute to anti-money laundering and anti-corruption efforts.
Where can you find more information about beneficial ownership and FinCEN reporting?
Roberts Law, PLLC assists businesses with the issues surrounding filing for compliance with the Corporate Transparency Act. We assist reporting companies with filing their required BOI reports and updates and serve as a company applicant.
Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction or the jurisdiction applicable to your issue/matter. No information contained in this post should be construed as legal advice from Roberts Law, PLLC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
