FinCEN’s New Beneficial Ownership Reporting Requirements: What You Need to Know

As part of the ongoing efforts to combat financial crimes, the Financial Crimes Enforcement Network (FinCEN) has introduced new beneficial ownership reporting requirements under the Corporate Transparency Act (CTA).

These regulations aim to increase transparency and prevent illegal activities such as money laundering and financial fraud. At Farmers and Merchants State Bank, we understand that these changes can be complex and may raise questions for our clients. Let’s take a look at the new requirements and how they might affect your business.

What Are the New Requirements?

The new rules require certain entities to report information about their beneficial owners to FinCEN. A beneficial owner is defined as any individual who, directly or indirectly, owns or controls at least 25% of a company or has substantial control over the company. This information must be reported to FinCEN and includes details such as the beneficial owner’s name, address, date of birth, and an identification number.

Why Are These Changes Important?

The primary goal of these new regulations is to prevent bad actors from using shell companies and other opaque ownership structures to hide their illicit activities. By requiring businesses to disclose their beneficial owners, FinCEN aims to create a more transparent financial system that is less susceptible to abuse.

How Does This Affect Your Business?

If your business falls under the reporting requirements, you will need to identify and report your beneficial owners to FinCEN. This is in addition to any information you may already provide to financial institutions like Farmers and Merchants State Bank as part of federal customer due diligence requirements. It’s important to understand that providing information to your bank does not fulfill the requirement to report to FinCEN, and vice versa.

Steps to Compliance

To help you navigate these new requirements, we’ve created a handy checklist:

Complying with FinCEN’s Beneficial Ownership Reporting Requirements

Identify Beneficial Owners:

• Determine who owns or controls at least 25% of your company.
• Identify individuals with substantial control over the company.

Gather Required Information:

• Information About Beneficial Owners:
  • Full name
  • Address
  • Date of birth
  • Identification number (e.g., Social Security Number, Passport Number)
• Information About Entities:
  • Name, any trade name or doing business as (DBA) name
  • Address
  • Jurisdiction of formation and of registration (if foreign entity)
  • Tax identification number
• Other Information & Certificates:
  • Information about the company applicant(s)
  • Certification by the individual filing the report with FinCEN

Report to FinCEN:

1. Submit the required information to FinCEN through their online portal.

Maintain Records:

1. Keep detailed records of the reported information.
2. Ensure records are updated regularly to reflect any changes in ownership or control.

Stay Informed:

1. Regularly review updates from FinCEN to stay compliant with any changes in the regulations.
2. Consult with legal or compliance experts if you have any questions or concerns.

By following this checklist, you can ensure that your business remains compliant with FinCEN’s new beneficial ownership reporting requirements. At Farmers and Merchants State Bank, we are here to support you through these changes. If you have any questions or need assistance, please don’t hesitate to contact us.