Five things companies need to know

Information site for the Financial Crimes Enforcement Network

Financial Crimes Enforcement Network

If you are a business owner, the question of whether or not you are required to file a beneficial ownership information report (BOIR) under the Corporate Transparency Act (CTA) is probably as clear as mud. A December 3 order from the United States District Court for the Eastern District of Texas in the case of Texas Top Cop Shop, Inc. against Garland overturned enforcement of the CTA. On December 23, 2024, a three-judge panel of the United States Court of Appeals for the Fifth Circuit issued a stay of that ruling and the Financial Crimes Enforcement Network set a deadline of January 13, 2025. Subsequently on December 26, 2024, the Full Fifth Circuit Court reversed the three-judge panel’s decision, making this new deadline unenforceable for the time being.

Even with all this back and forth in the courtroom, a BOIR may seem intimidating, but it’s actually quite simple. Here you will find answers to five frequently asked questions.

1. What is the CTA?

The CTA is a law enshrined in the Anti-Money Laundering Act of 2020 that was intended to modernize the country’s efforts to combat money laundering and counter the financing of terrorism. The law requires companies to report their ultimate owners, that is, the people who ultimately own or control the company, to prevent companies from being used for money laundering or other illegal activities.

2. Why do I have to submit my BOIR?

If the court ultimately rules that the CTA is enforceable, people who fail to report their BOI could face fines and other criminal penalties. They could face a fine of up to $10,000 and/or two years in prison.

3. Where do I report my BOI?

The Financial Crimes Enforcement Network offers a free website for filing your BOIR. To submit your report, go to BOI E-Filing System.

4. What information do I need to submit?

You’ll need basic information about your company, including its legal name, address and tax number, as well as details about each beneficial owner, such as their full name, date of birth, address and a valid ID number.

5. Do companies currently have to report their BOI?

At this time, companies are not required to submit their BOIR. The Financial Crimes Enforcement Network website states: “Please note that reporting requirements for beneficial ownership information have been changed by a recent federal court order. The Ministry of Finance is appealing against this order. In the meantime, reporting companies are not currently required to file a BOIR and will not be liable if they fail to do so while the applicable decision remains in effect. However, reporting companies may still choose to file a BOIR.”

It is of course the decision of each individual business owner whether or not to proceed and file their BOIR prior to the court ruling. That said, this will take up very little of your time and it may be worth following through and reporting so that you don’t have to constantly monitor the legal status of the CTA.