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Anti-Money Laundering Reporting Frightening LLC and Other Entity Owners

By Paul J. Carroll, CFP®February 6, 2024February 8th, 2024Videos

 

There’s a lot of noise being made about these beneficial ownership information reports that the Treasury is asking anybody who owns an LLC or certain other entities to file immediately. How big a deal is this, and what can you do about it?

The CTA BOIR reporting brings the United States in line with global reporting standards designed to counter money laundering and global crime. Finally, after many years of delay, those rules have come into force this year. There are different deadlines for different entities. If you came into the year with existing entities, you have until the end of the year to make a report. If you create an entity this year, however, you’ll have a shorter period of time to make that report, and after next year, it’ll be a much shorter period of time. So, this new set of rules creates a number of compliance headaches for the beneficial owners of LLCs and a bunch of other entities.

The online reporting system, and we have a link to that at the bottom of this page, is fairly self-explanatory, but not perfect. However, you’re going to find that many CPAs and financial professionals are not going to want to do this for you because in some jurisdictions getting too involved with this could be considered practicing law without a license, which is unfortunate because these are the people best suited to do this for you. As I said, it’s not that difficult to do yourself, but the real devil is in the details. Seemingly small changes can require you to make updated reports – could be changes in the percentage of ownership, changes in the address of a beneficial ownership, changes in the officers of a company. There’s a slew of changes that can pretty much guarantee you’re going to have to be making updates on a fairly regular basis, at least every few years.

So, what if you just don’t do it? Willful violations can result in fines of as much as $591 a day. Yeah, in 10 days you’re almost at $6,000 of fines. Huge fines for not complying with these rules, but before you get scared, remember that the key word is “willful violation”. There are hundreds of thousands, if not millions of these entities in the United States. How is Treasury going to stay on top of it all? They certainly don’t have the resources to come down on every small violation with a ton of breaks, and I’d be shocked if that was what happened. But the impact of these laws will be that it deters the formation of some LLCs. It hopefully will improve the trust of the public in business, but it also brings up certain privacy concerns. This information is not subject to Freedom of Information Act requests. This information supposedly is only to be accessible by law enforcement officers approved by Treasury, but there is a lot of support available. There are a lot of interesting articles, and there are some companies that are building their entire business model around supporting you and helping you stay on top of this fairly onerous reporting requirement. With the help of these firms, it won’t be so onerous. Doing it yourself, I would say buyer beware. We’ve put some links for some companies. They’re not affiliated to us, and we’ve also created a link to the Treasury website that teaches you how to take care of this if you choose to do it yourself. It’s frustrating. There is supposedly a “greater good”, and I am convinced in the next two years there’ll be a lot of massaging of the system, improvement of the system, simplification of the system, but you need to know it and you can’t completely ignore it.

We wish you the best of investing success. Thank you.

 

Additional Information

  • For entities formed prior to January 1, 2024 – the filing must be completed by 12/31/2024.
  • For entities formed in 2024 – the filing must be completed within 90 days of formation.
  • For entities formed in 2025 or later – the filing must be completed within 30 days of formation.

Beneficial Ownership Information Reports must be filed for all active entities that are not exempt by another similar filing process, such as Banks. This includes LLCs, LPs, and any other entity formed by filing with the Secretary of State.

Required entities will need to provide information about the “Beneficial Owner(s)”, those who have ownership stake in an entity, as well as, those who are “important decision makers”. The information required from these individuals is basic; Legal name, Address, & a copy of a valid Passport or other Government Issued ID.

Resources

BOI E-Filing System
Beneficial Ownership Information Reporting Rule Fact Sheet | FinCEN.gov
Beneficial Ownership Information Compliance from CT Corporation | Wolters Kluwer
Corporate Transparency Act / BOI Reporting | Dossey & Jones, PLLC
FinCEN BOI Reporting Instructions | Knighton & Stone, PLLC

Founder & CEO at Avion Wealth

Paul is the founder and CEO of Avion Wealth, LLC. He leads a team of wealth managers in building and executing financial plans for high net worth individuals and families. Contact Avion Wealth to speak with a financial advisor.