Beneficial-ownership filing mandate takes effect in 2024

The Financial Crimes Enforcement Network (FinCEN) as of Jan. 1, 2024, is accepting beneficial-ownership information reports from existing and newly created companies, a mandate that applies to many real estate-related entities.

FinCEN, part of the U.S. Department of Treasury, has been authorized to collect the reports, a requirement established under the Corporate Transparency Act of 2021. The law, enacted to curb illicit financial activities, requires nonexempt companies doing business in the United States to register information about the individuals who ultimately own or are in control of them.

“The launch of the United States’ beneficial ownership registry marks a historic step forward to protect our economic and national security,” said Secretary of the Treasury Janet Yellen in a prepared statement. “Corporate anonymity enables money laundering, drug trafficking, terrorism, and corruption. 

“It harms American citizens and puts law-abiding small businesses at a disadvantage. Having a centralized database of beneficial ownership information will eliminate critical vulnerabilities in our financial system and allow us to tackle the scourge of illicit finance enabled by opaque corporate structures.”

Reporting companies must file beneficial-ownership reports as follows, according to a press announcement by FinCEN:

• Existing companies: Reporting companies created or registered to do business in the United States before Jan. 1, 2024, must file by Jan. 1, 2025.

• Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.

The filing is free of charge and needs to be submitted only once, absent a need to update or correct information provided. Information required for the report includes the name, date of birth, address and a valid ID (such as a non-expired passport or U.S. driver’s license).

The company also must submit information, including its official name and address — with newly created companies as of Jan. 1, 2024, also required to submit information about the individuals who formed the business.

A total of 23 types of entities are exempt from the reporting requirements, including many publicly traded companies and nonprofits as well as certain large operating companies.