Yana Timokhova / November 04, 2024

New Cross Border Requirements for Filing Beneficial Ownership Information Report in the U.S.: What Our Clients Need to Know

At our firm, we understand how regulatory changes can impact your business. A recent regulatory update to be aware of is the requirement to file a Beneficial Ownership Information Report (BOIR) in the United States. This obligation also extends to Canadian entities that are registered to conduct business in the U.S. As governments push for increased corporate transparency, these changes are designed to help combat financial crimes such as money laundering and tax evasion by clarifying who truly owns and controls a company.

For those of you managing businesses, it’s crucial to understand how these new regulations could affect you. Here’s what you need to know:

What is a Beneficial Ownership Information Report (BOIR)?

A BOIR is a required filing that mandates companies to reveal the identities of their beneficial owners—those who hold at least 25% ownership of the company or have substantial control over its operations.

The goal is to ensure that the authorities can trace the actual people behind a business, preventing anonymous entities from being used for illegal activities. This type of transparency is becoming a global standard, and compliance is essential.

Who Must File a BOIR?

If you’re running a business in the U.S. or in Canada (if the entity is registered to do business in the U.S.), you’re likely subject to the new reporting rules. Most entities, including corporations, LLCs, partnerships, and other legal structures, will be required to submit a BOIR.

While there are some exceptions—such as publicly traded companies, financial institutions, and certain other regulated entities—most private businesses will need to comply.

What Information Will You Need to Provide?

You’ll need to disclose detailed information about your beneficial owners, which typically includes:

• Full legal name
• Date of birth
• Address
• Identification number (such as a Social Security Number or equivalent)
• Details on their ownership or control stake (percentage of shares, voting rights, etc.)

This information is sensitive, so it’s important to handle it securely and accurately. Our firm can help ensure that you comply with these requirements while protecting your business’s privacy and interests.

Filing Deadlines and Updates

Filing for BOIR begins on January 1, 2024. If your business was created or registered to operate in the U.S. before this date, you have until January 1, 2025, to submit your initial report.

For businesses created or registered between January 1, 2024, and January 1, 2025, you will have 90 calendar days to file your initial BOIR after receiving either actual notice or public notice that your company’s creation or registration is complete. This 90-day period begins from whichever comes first—either the date you receive actual notice or the date the secretary of state (or a similar authority) publicly announces your company’s creation or registration.

For businesses created or registered on or after January 1, 2025, you will be required to file your initial BOIR within 30 days of receiving either actual or public notice that your company’s creation or registration is finalized.

Failing to meet deadlines or providing incomplete information could result in substantial fines and legal consequences. Keeping these reports up-to-date and accurate is essential to avoid penalties.

If there are any changes to your company’s required information or its beneficial owners after the BOIR has been filed, your company must submit an updated report within 30 days of the change.

Steps to Ensure Compliance

If your business falls under the new BOIR regulations, here are the next steps we recommend:

1. Identify your beneficial owners: Start by reviewing your ownership structure to determine who qualifies as a beneficial owner.
2. Collect the necessary information: Ensure that you have all required documentation and details for reporting, including legal names, ownership percentages, and identification numbers.
3. Set up a reporting process: Establish procedures to track changes in ownership or control and ensure timely updates are made to your BOIR filing.
4. Consult with legal professionals: Given the complexity of these regulations, working with legal counsel can help ensure you’re meeting your obligations without exposing your business to unnecessary risks.

How Our Firm Can Help

Navigating new compliance requirements can be challenging, but you don’t have to go through it alone. Our firm specializes in advising businesses on corporate governance and regulatory compliance. If you need help understanding how the new BOIR requirements affect your business or assistance with filing, our team is here to guide you through every step of the process.