Beneficial Ownership Information Reporting

Final regulations under IRC section 6403 require disclosures of the beneficial owners of the entity and individuals who have filed an application with specified governmental authorities to create the entity or register it to do business in the United States to FinCEN.  The final regulations become effective January 1, 2024 requiring many corporations, limited liability companies, and other entities created in or registered to do business in the United States to report beneficial ownership information.

These requirements are intended to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity, while minimizing the burden on entities doing business in the United States.

Prior to adopting the final regulations, it was possible for individuals to use entities such as corporations, trusts, or partnership to hide their ownership of foreign bank accounts.  However, under the new beneficial ownership information reporting requirement for FBAR (Foreign Bank Account Report), the FinCEN requires that individuals disclose beneficial ownership information for these entities.  This means that applicable entities must provide information about any person who owns or controls the entity, including their name, address, and identification number, if applicable.  The purpose of this requirement is to increase transparency and prevent individuals from using entities to hide their ownership of foreign bank accounts.

Under the final regulations, a beneficial owner includes any individual who, directly or indirectly, either exercises substantial control over a reporting company, or owns or controls at least 25% of the ownership interests of a reporting company.  The terms substantial control and beneficial owner further defined in the final regulations.

2022-21020.pdf (