2024 ELDER & DISABILITY LAW SYMPOSIUM PDF Free Download
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2024 Seminar Material
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New Jersey Institute for
Continuing Legal Education
A Division of the State Bar Association
NJICLE.com
2024 ELDER &
DISABILITY LAW
SYMPOSIUM
MI0596.24
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2024 ELDER & DISABILITY
LAW SYMPOSIUM
Moderators
Gary Mazart, Esq.
Schenck, Price, Smith & King, LLP
(Florham Park, Sparta, Paramus)
Crystal West Edwards, Esq.
Certified as an Elder Law Attorney by
the National Elder Law Foundation
Porzio Bromberg & Newman P.C.
(Morristown)
Speakers
Nicol D. Bell, Esq.
The Wacks Law Group
(Whippany; New York City)
Sean Benoit, Esq.
Community Health Law Project
(South Orange)
Melanie R. Costantino, Esq.
The Law Offices of Melanie R.
Costantino (Hackensack)
Erika Kerber, Esq.
Community Health Law Project
(South Orange)
Constantina Koulosousas, Esq.
Certified as an Elder Law Attorney by
the National Elder Law Foundation
Edward Wacks & Associates, LLC
(Whippany)
Lauren S. Marinaro, Esq.
Fink Rosner Ershow-Levenberg Marinaro LLC
(Clark)
MI0596.24
Ryann M. Siclari, Esq.
Certified as an Elder Law Attorney by
the National Elder Law Foundation
Porzio, Bromberg & Newman, P.C.
(Morristown)
Sarah G. Townsend, Esq.
Schenck, Price, Smith & King, LLP
(Florham Park, Sparta, Paramus; New York City)
Jordan Wassel, Esq.
Schenck, Price, Smith & King, LLP
(Florham Park, Sparta, Paramus; New York City)
Deirdre R. Wheatley-Liss, Esq.
Certified as an Elder Law Attorney by
the National Elder Law Foundation
Porzio, Bromberg & Newman, P.C.
(Morristown, Princeton; New York City)
Shirley B. Whitenack, Esq.
Schenck Price Smith & King, LLP
(Florham Park, Sparta, Paramus)
Kerri A. Wright, Esq.
Porzio, Bromberg & Newman, P.C.
(Morristown)
Jacqueline Yarmo, Esq.
Fink Rosner Ershow-Levenberg Marinaro LLC
(Clark)
© 2024 New Jersey State Bar Association. All rights reserved. Any copying of material
herein, in whole or in part, and by any means without written permission is prohibited.
Requests for such permission should be sent to NJICLE, a Division of the New Jersey
State Bar Association, New Jersey Law Center, One Constitution Square, New
Brunswick, New Jersey 08901-1520.
Table of Contents
Page
Ethics: Representing Clients With Diminished Capacity
Shirley B. Whitenack, Esq. 1
Ethical Considerations When Representing a Client With Diminished
Capacity 1
Keeping in Tune With the Rules of Professional Conduct 1
Competency of the Client 3
General Durable Power of Attorney 4
Advance Directive 4
Wills 5
Deeds and Intervivos Trusts 6
Gifts 7
Conservatorship 7
Ethics: Representing Clients With Diminished Capacity
PowerPoint Presentation
Shirley B. Whitenack, Esq. 9
Invisible Disabilities: Can You See What I See?
PowerPoint Presentation
Crystal West Edwards, Esq., CELA
Kerri A. Wright, Esq. 31
Community Health Law Project
PowerPoint Presentation
Erika Kerber, Esq.
Sean Benoit, Esq. 51
Corporate Transparency Act – Law and Compliance
PowerPoint Presentation
Deirdre R. Wheatley-Liss, Esq. 65
Attachments
31 U.S. 5336 151
CFR § 1010.380 163
Corporate Transparency Act (Sec. 6401 et seq.) 169
Beneficial Ownership Information – Frequently Asked Questions 191
Small Entity Compliance Guide 241
About the Panelists… 299
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Ethics: Representing Clients with Diminished Capacity
By: Shirley B. Whitenack, Esq.
Schenck, Price, Smith & King, LLP
Copyright 2024
All rights reserved.
ETHICAL CONSIDERATIONS WHEN REPRESENTING A CLIENT
WITH DIMINISHED CAPACITY
A. Keeping in Tune with the Rules of Professional Conduct
1. Informed Consent. New Jersey’s Rules of Professional Conduct (“RPC”)
governing lawyers encompass the concept of informed consent by clients. See RPC 1.0
(denoting “informed consent” as “the agreement by a person to a proposed course of
conduct after the lawyer has communicated adequate information and explanation about
the material risk of and reasonably available alternatives to the proposed course of
conduct”). A threshold issue, therefore, is whether the potential client has sufficient
capacity to understand and agree to the proposed representation.
2. Client Under a Disability. When dealing with the management or
disposition of an estate, it is imperative for the attorney to determine who the client is and
appreciate the possibility of conflicting interests. Although a client may have the
requisite capacity to execute certain legal documents, he or she may have some
diminished capacity. If, in connection with the representation, a client’s decision making
ability is impaired, New Jersey’s Rules of Professional Conduct call for the lawyer to “as
far as reasonably possible, maintain a normal client-lawyer relationship with the client.”
RPC 1.14(a). A lawyer may seek appointment of a guardian for the client or take other
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protective action “only when the lawyer reasonably believes that the client cannot
adequately act in the client’s own interest.” RPC 1.14(b).
In other states, the attorney’s protective action may raise issues of attorney-client
privilege, and the violation of the privilege during the guardianship proceeding. In New
Jersey, attorneys may initiate a guardianship proceeding on behalf of the client where the
attorney reasonably believes that the client cannot adequately act in the client’s own
interest, especially if the client can no longer communicate because of a mental disability
such as senile dementia or Alzheimer’s disease. RPC 1.14(b).
3. Confidentiality of Information. As a general rule, an attorney is prohibited
by RPC 1.6 from disclosing information relating to representation of a client unless the
client consents to the disclosure after consultation. The exceptions to this rule involve
the prevention or rectification of a criminal, illegal or fraudulent act that the lawyer
reasonably believes “is likely to result in death or substantial bodily harm or substantial
injury to the financial interest or property of another” or “is likely to perpetrate a fraud
upon a tribunal.” In addition, RPC 1.14(c) states that a lawyer “is impliedly authorized
under RPC 1.6(a)” to disclose information about the client “to the extent reasonably
necessary to protect the client’s interests” when the lawyer takes protective action
pursuant to RPC 1.14(b).
It is common for clients with diminished capacity to be accompanied by other
family members when they consult with an attorney. The attorney must ascertain whether
the person is making his or her own decisions or whether those decisions are the product
of undue influence. For this reason, it is prudent to speak to the person with diminished
capacity outside the presence of others and confirm that the person understands the
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proposed course of action and agrees to it. A person with diminished capacity may
request that information pertaining to the representation be disclosed to another family
member. The lawyer may do so, provided that the client understands that such disclosure
may not be protected by the attorney-client privilege.
4. Settlement Negotiations. An attorney is required to abide by a client’s
decisions concerning the scope and objectives of the representation and must consult with
the client about the means to pursue those objectives. RPC 1.2(a). Moreover, an attorney
must abide by a client’s decision whether to settle a matter. Id. Accordingly, the client
must have the requisite capacity to understand the risks and benefits of settlement vs.
trial.
B. Competency of the Client
1. Definition of Capacity. While the legal and medical communities tend to
define the term “capacity” differently, it is agreed that capacity involves the ability to
understand and process information so that a decision can be made and communicated.
New Jersey law defines an “incapacitated individual” as “an individual who is impaired
by reason of mental illness or mental deficiency to the extent that he lacks sufficient
capacity to govern himself and manage his affairs.” N.J.S.A. 3B:1-2. The statute also
defines “incapacitated individual” to encompass “an individual who is impaired by
reason of physical illness or disability, chronic use of drugs, chronic alcoholism or other
cause (except minority) to the extent that he lacks sufficient capacity to govern himself
and manage his affairs.” Id.
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2. Intellectual Disability. This term refers to “a significant subaverage
general intellectual functioning existing concurrently with deficits in adaptive behavior
which are manifested during the development period.” N.J.S.A. 3B:1-2.
C. General Durable Power of Attorney.
A person with diminished capacity may have the requisite cognitive ability to
execute a power of attorney. An attorney-in-fact may be able to prosecute or defend a
litigation on behalf of the principal. The client signing a power of attorney must
comprehend that he or she is placing the agent in charge of his or her affairs and the
consequences of doing so. The attorney-in-fact must understand that he or she must act in
the best interests of the principal.
D. Advance Directive.
1. The New Jersey Advance Directives for Health Care Act (“Living Wills”)
recognizes an individual’s right to have life- prolonging medical or surgical procedures
withheld or withdrawn. N.J.S.A. §§26:2H-53 to -78. The Act defines “decision making
capacity” as “a patient’s ability to understand and appreciate the nature and consequences
of health care decisions, including the benefits and risks of each, and alternatives to any
proposed health care, and to reach an informed decision. A patient’s decision making
capacity is evaluated relative to the demands of a particular health care decision.”
N.J.S.A. §26:2H-55.
2. A New Jersey chancery court explained that the issue of capacity to
consent to or refuse a medical procedure is within the purview of the judiciary and that
the test for determining a patient’s mental capacity to consent to medical treatment is
whether the patient has “sufficient mind to reasonably understand the condition, the
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nature and effect of the proposed treatment, attendant risks in pursuing the treatment, and
not pursuing the treatment.” See In re Schiller, 148 N.J. Super. 168, 181 (Ch. Div. 1977).
If there is prima facie evidence of mental incapacity and there is time, a general guardian
should be appointed pursuant to R. 4:86-1 to -12. Schiller, 148 N.J. Super. at 179.
3. Separately, a New Jersey chancery court held that an advance directive
executed by a woman who previously had been adjudicated to be mentally incapacitated
and unable to consent to medical treatment was not binding and, therefore, was
unenforceable; however, it could be used by her guardian as evidence of the woman’s
subjective intent. In re Roche, 296 N.J. Super. 583 (Ch. Div. 1996). The court stated that
“once a person has been adjudicated incompetent, he or she can no longer exercise the
right to execute an advance directive pursuant to the Advance Directives Act.” Id. at 591.
An incapacitated person’s common law right to self-determination is the same as that of a
person with capacity, except that the right of self-determination for the incapacitated
person must be balanced by the court with concern for his or her best interests. See id. at
587 (citing In re M.R., 135 N.J. 155 (1994)).
E. Wills.
1. It is well settled in New Jersey that the standard for testamentary capacity
is relatively low and not difficult to satisfy. See In re Estate of Frisch, 250 N.J. Super.
438 (1991) (recognizing the low threshold for testamentary capacity); see also, In re
Wilson’s Will, 107 N.J. Eq. 604 (Prerog. Ct. 1931) (holding that a very low degree of
mental capacity is sufficient). Typically, the courts look for four elements to satisfy
testamentary capacity:
(1) Comprehension of the action being taken and its effect.
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(2) Knowledge of the nature and extent of the testator’s
property.
(3) Recognition of the natural objects of the testator’s bounty.
(4) Presence of the three elements at the time of the decision.
See generally, In re Phillips, 139 N.J. Eq. 257 (1947) (holding that a finding of
testamentary capacity requires the testator to know the extent of his property and the
natural objects of his bounty and to have a sound mind to know and understand his
desired disposition of his property); but see In re Will of Liebl, 260 N.J. Super. 519 (App.
Div. 1992), (testator’s misconception of exact nature and value assets will not invalidate
Will where there is no evidence of incapacity, provided testator has general estimate of
value of estate).
A testator may have a mental disorder and yet still be found to have the requisite
capacity to create a will. See, e.g., Howell v. Taylor, 50 N.J. Eq. 428 (Prerog. Ct. 1892).
If, however, there has been an adjudication of incapacity such that the incapacitated
person is divested of all control and management of his or her property, the incapacitated
person is deemed to be unable to execute a valid will, even if that person executed the
will during a lucid interval with the requisite testamentary capacity. In re Frisch, supra,
250 N.J. Super. at 447-48 (citing In re Estate of Bechtold, 150 N.J. Super. 550 (Ch. Div.
1997), aff’d, 156 N.J. Super. 194 (App. Div. 1978) and N.J.S.A. 3B:12-27). The court
reasoned that there must be a finding of a restoration of capacity before the issue of
testamentary capacity can be reached.
F. Deeds and Inter Vivos Trusts.
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New Jersey law is not decisive on the issue of whether the execution of these
documents requires testamentary capacity, donative capacity or contractual capacity.
While a living trust may have many of the same characteristics of a contract, such a trust
is often designed to avoid probate, and therefore, it is not unreasonable to argue that the
standard for testamentary capacity should be applied.
G. Gifts.
Under New Jersey law, a valid inter vivos gift generally requires four elements:
(1) an act constituting actual or symbolic delivery of the subject matter of the gift, (2) an
intent to give, (3) an acceptance of the gift, and (4) the donor’s relinquishment of
ownership and dominion over the subject matter of the gift. Pascale v. Pascale, 113 N.J.
20, 29 (1988). The donor must understand that once the gift is made he or she does not
have the right to demand the return of the gift.
H. Conservatorship
A person with diminished capacity may want court supervised surrogate
management while retaining control over his or her finances because family members are
in disagreement or the conservatee has no caregivers whom he or she trusts. The
appointment of a conservator is governed by New Jersey statute and court rules. N.J.S.A.
3B:13A-1 et seq.; R.4:86-11. The action is commenced in Chancery Division, Probate
Part by filing a verified complaint and order to show cause by the conservatee or other
person on his or her behalf on notice.
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ETHICS:Representing
ClientswithDiminished
Capacity
PresentedBy:
ShirleyB.Whitenack,Esq.
1
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9/5/2024
2©Schenck,Price,Smith&King,LLP
Thispresentation,andanyaccompanying
materials,areforinformationalpurposesonly
andarenotintendedtoprovide,norshould
theyberelieduponas,legaladvice.
Disclaimer
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3©Schenck,Price,Smith&King,LLP
Schenck,Price,Smith&King,LLP
ØRPC1.0– InformedConsent
Ø“Theagreementbyapersontoaproposedcourse
ofconductafterthelawyerhascommunicated
adequateinformationandexplanationaboutthe
materialriskofandreasonablyavailable
alternativestotheproposedcourseofconduct.”
ØDoesthepotentialclienthavesufficientcapacityto
understandandagreetotheproposed
representation?
Ø
KeepinginTunewith
ØtheRulesofProfessionalConduct
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Schenck,Price,Smith&King,LLP
ØRPC1.14– ClientUnderaDisability
ØEveniftheclienthastherequisitecapacitytoexecutecertain
legaldocuments,doestheclienthavediminishedcapacity?
ØThelawyermust“asfarasreasonablypossible,maintaina
normalclient-lawyerrelationshipwiththeclient.”
ØAlawyermayseekappointmentofaguardianfortheclientor
takeotherprotectiveaction“onlywhenthelawyer
reasonablybelievesthattheclientcannotadequatelyactin
theclient’sowninterest.”
Ø“Informationrelatingtotherepresentationofaclientwith
diminishedcapacityisprotectedbyRPC1.6.”
ØClientUnderaDisability
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Schenck,Price,Smith&King,LLP
ØRPC1.6– Lawyerisprohibitedfromdisclosing
informationrelatingtorepresentationofaclient
unlessclientconsentsafterconsultation.
ØException:
Preventionorrectificationofcriminal,illegalorfraudulent
actthatlawyerreasonablybelievesis“likelytoresultin
deathorsubstantialbodilyharmorsubstantialinjuryto
thefinancialinterestorpropertyofanother”or“islikely
toperpetrateafrauduponatribunal.
ØConfidentialityofInformation
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Schenck,Price,Smith&King,LLP
ØRPC1.14(c)– Lawyerisimpliedlyauthorizedby
RPC1.6(a)discloseclientinformation“to
extentreasonablynecessarytoprotectthe
client’sinterests.”
ØRPC1.14andRPC1.6
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ØCommonforelderlypeopleorpeoplewith
cognitivedisabilitiestobeaccompaniedbyothers
whentheyconsultwithanattorney.
ØLawyershouldconsiderwhethertheclientis
makinghisorherowndecisionsorwhetherthose
decisionsareproductofundueinfluence.
ØPrudenttoinitiallyspeaktoclientoutsidethe
presenceofothersandconfirmclientunderstands
proposedcourseofactionandagreestoit.
Ø
WhenClientisAccompaniedby
ØSomeoneElsetoAttorneyMeeting
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ØLawyermaydiscloseconfidentialinformationto
othersuponconsentofclientbutclientshould
understandthatsuchdisclosuremaynotbe
protectedbytheattorney-clientprivilege.
Ø
DisclosuretoOthers
ØatClientMeetingorAfter
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ØRPC1.7– Lawyercannotrepresentclientif
representationisadversetoanotherclient
unlessattorneybelievestherepresentationwill
notadverselyaffectrepresentationandeach
clientconsentsafterfulldisclosureand
consultation.
ØConflictofInterest
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ØNAELAAspirationalStandardsforthePractice
ofElderandSpecialNeedsLawAttorneys
Providesguidancetoattorneyspracticingelder
andspecialneedslaw.
ØNAELAASPIRATIONALSTANDARDS
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Schenck,Price,Smith&King,LLP
ØAmericanBarAssociationbrochureexplains
the“FourC’s”ofelderlawethics—client
identification,conflictsofinterest,
confidentiality,andcompetency.
ØDownloadafreepdfcopyat
https://www.americanbar.org/content/dam/a
ba/administrative/law_aging/2020-elderlaw-
ethics-brochure.pdf
Ø
WhyAmIleftintheWaitingRoom?
UnderstandingtheFourC'sofElderLawEthics
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ØLawyershouldadoptproceduretoassess
client’smentalcapacity
ØAscertainbestwaystocommunicate.
ØDeterminewhetherclientishearingand/or
visuallyimpaired
ØObtainassessmentbymedicaland/orgeriatric
professionalswhenappropriate
ØAssessingClient’sCapacity
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ØMini-MentalStatusExaminationandother
similartests
ØShouldlawyerusethesetools?
ØUsingTeststoAssessCapacity
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ØIfattorneysuspectstheremaybeundue
influence,meetseparatelywithclientanddiscuss
thereasonsfortheproposedcourseofaction.
ØHaveanotherattorneyorlegalassistantpresentat
themeetingsanddocumentexecutions.
ØHavetheclientprovidedocumentarysupportfor
theproposedcourseofaction.
ØIfpossible,havetheclientwritethereasonsfor
theproposedcourseofaction.
Ø
ProtectingClient’sDocumentsfrom
ØContestandInvalidation
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ØMakeandkeepnotesofmeetingsandclient
discussionsinthefile.
Ø
ProtectingClient’sDocumentsfrom
ØContestandInvalidation
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ØShouldyouvideotapeoraudiotapedocument
executions?
ØAdvantages:mayshowclient’sunderstandingand
consentregardingcontentsofthedocuments
ØDisadvantages:maysuggestattorneyhasconcerns
regardingcapacityorundueinfluence;clientmay
showanxiety,makingitappearthatclienthasless
capacitythanheorsheactuallyhas.
Ø
VideotapingorAudiotaping
ØDocumentExecutions
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ØConfidentialrelationship
ØDisinheritanceorunequalshares
ØAnotherindividualasksforpreparationofestate
planningdocumentfavorabletothatindividual
ØCaregivers
ØSomeoneotherthantheclientisdoingmostofthe
talkingatthemeeting
ØClientoverlyreliesonsomeoneelsetoanswer
questionsorprovideinformation.
Ø
RecognizingSituations
ØRipeforUndueInfluence
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Schenck,Price,Smith&King,LLP
ProtectClientConfidentiality
ClientDocuments
TelephoneConferences
Videoconferences
ØWorkingFromHome
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Schenck,Price,Smith&King,LLP
InternetSecurity
PublicorSharedWiFi networks
VPN
Staff’sPersonalDevices
ØDataSecurity
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Schenck,Price,Smith&King,LLP
“WhoistheClient”hasn’tchanged
PersoninNeed?
Attorney-in-Fact?
Guardian?
ØCommunicationswiththeClient
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Schenck,Price,Smith&King,LLP
Lettheclienttellyoutheirwishesintheirown
words
Watchoutforredflags
Clientrepeatswhatsomeoneelsewantsthe
clienttodo
Clientreliesonsomeoneelsetotalkforthem
Afamilymembertellsyouwiththeseniorwants
ØCommunicatingwiththeClient
Remotely
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22©Schenck,Price,Smith&King,LLP
Schenck,Price,Smith&King,LLP
ShirleyB.Whitenack,Esq.
SCHENCK,PRICE,SMITH&KING,LLP
FlorhamPark,NJ– Paramus,NJ– Sparta,NJ
973-539-1000
sbw@spsk.com
THANKYOU
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(c) Schenck, Price, Smith & King, LLP
InvisibleDisabilities:
CanyouseewhatIsee?
1
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Principal– WealthPreservation
Porzio,Bromberg&Newman
Principal– Employment&Labor
Porzio,Bromberg&Newman
2
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Itisprofessionalmisconductforalawyerto
•(g)engage,inaprofessionalcapacity,inconduct
involvingdiscrimination(exceptemployment
discriminationunlessresultinginafinalagencyor
judicialdetermination)becauseofrace,color,religion,
age,sex,sexualorientation,nationalorigin,language,
maritalstatus,socio-economonicstatus,orhandicap
wheretheconductisintendedorlikelytocauseharm
3
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•5of24hoursofcreditshallbeconcentrated
intheareasofethicsand/orprofessionalism.
•Atleast2ofthe5hoursofcredit...shallbein
diversity,inclusion,andeliminationofbias.
4
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•61millionadultsintheUS
livewithadisability
•26percent(onein4)of
adultsintheUnitedStates
havesometypeof
disability
5
35
•UsePeopleFirstLanguagetotellwhatapersonHAS,
notwhatapersonIS.
•Emphasizeabilitiesnotlimitations.
•Avoidnegativewordsthatimplytragedy,suchas
afflictedwith,suffers,victim,prisonerandunfortunate.
•Recognizethatadisabilityisnotachallengetobe
overcome.
•Promoteunderstanding,respect,dignityandpositive
outlooks.
6
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7
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•Medicalconditionsthatinterferewiththe
usualactivitiesofdailylifebut
.
8
38
•MultipleSclerosis
•Lupus
•Epilepsy
•Fibromyalgia
•Arthritis
•ADHD
•TBI
•Mentalillnesses
•Diabetes
•Dyslexia
•Hearingimpairments
•Sleepdisorders
•Chronicpainorarthritis
•PTSD
9
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10
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•CDCencouragesemployeestobeasfragrance-freeaspossiblewhentheyarriveinthe
workplace.
•Theuseofsomeproductswithfragrancemaybedetrimentaltothehealthofworkers
withchemicalsensitivities,allergies,asthma,andchronicheadaches/migraines.
•Employeesshouldavoidscenteddetergentsandfabricsoftenersonclothesworntothe
office.Manyfragrance-freepersonalcareandlaundryproductsareeasilyavailableand
providesaferalternatives.
11
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•Peoplemustdisclosetheirdisabilitiestoreceive
accommodations
•Notdisclosingandrequestingaccommodationscanbe
detrimentaltoperformanceevaluationsifthedisabilityinterferes
withrequiredtasks.
•Withoutdisclosure,supervisorsandco-workersmayassumethat
unexpectedpoororinconsistentperformanceaccuratelyreflects
theperson’sabilitytopeform.
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•PlanningAccessibleMeetingsandEventsToolkit:ABA
https://www.americanbar.org/content/dam/aba/administrative/commission-
disability-rights/accessible-meetings-toolkit.pdf
•EmployerAssistanceandResourceNetworkonDisability
Inclusion
https://askearn.org/
•ExamplesofPeopleFirstLanguage
https://awsfoundation.org/wp-content/uploads/2015/10/People-First-Language-Chart.pdf
13
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Houston,wehaveaproblem!
•isagreatlawyer butsheisabouttodriveourbest
assistantoutofthebuilding!
•Everyoneknowsstaffresourcesareslimbuther(shared!)assistant
spendsmostofthedayasClare’spersonalcourier...sherefusesto
getherdocumentsofftheprinter,shewillnotretrievefilesfromthe
fileroomandhasevenaskedherassistanttopickupherlunch.
•Nottomention,theteamcomplainsshenevercomestoteam
buildingactivitiesandonlyinteractsonasurfacelevel.
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•40yearsyoung
•Practicingfor14years
•Trustedadvisortomany
•Barredin2states
•AnimalLover,enjoysrealityTV
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•ThereissomethingwrongwithmethatyoucannotseeandifI
didnottellyou,likeIjustdid,youwouldnotknow.
•Iamapersonwhoisallowedtoparkinahandicappedspot.
TherearedayswhenIcannotwalk,dayswhenIcannotgetout
ofbedanddayswhenIcannotopenmyhands.
•Ihavebeeninpaineverydayfor11years.IgetupeverydayandI
gotoworkandIfighttobeabletodothat.
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•UnlessIletyouknowthatIneedyourhelp,thereisnoway
foryoutoknowthatIneedhelp.Therearealotofthings
thatIcan’tdoandIhavetoaskforhelpalot.
•ThereisanassumptionthatIcandothingsthatotherscan
do.ButIcannot.
•Likethefirm’sannualfamilypicnicandthegolfouting.I
haveneverbeenabletoattendthosethings.Never.
17
47
•Icannotgotoafriend/co-worker’shouseorhangoutat
theirpoolparty.
•Everytime,Ihavetosay“Ican’t,Ican’t,Ifeeldisabled.IfIfeel
disabledenough,itwillcauseproblemswiththerelationship.
Isimplywillnotwanttoengage
•Icannotattendsomethingthatisnotaccessibletome.
That’saproblem.
18
48
Counseling?
PerformanceReview?
Disclosure?
19
49
This page intentionally left blank
50
Community
Health Law
Project
W W W . C H L P . O R G
E R I K A K E R B E R , E S Q .
E X E C U T I V E D I R E C T O R
S E A N B E N O I T , E S Q .
D I R E C T O R O F L I T I G A T I O N
1
51
1. OurHistory
2.OurMissionandVision
3.Medical-LegalPartnerships
4.ProBonoPilotProgram
5.HomecareProgram
6.HousingPrograms
7.AgingPrograms
8.PublicEntitlementPrograms
9.CHLPSocialMedia
Agenda
K E Y P O I N T S
C o m m u n i t y H e a l t h L a w P r o j e c t
2
52
CHLPwasfoundedin1976.
CHLPisaspeciallegalaidsociety
designated bytheNewJersey
SupremeCourt.
Overthepast48years,CHLPhas
providedinformation,referrals,
advice,counsel,andrepresentationto
nearly90,000low-income and
indigentNewJerseyresidentsliving
withdisabilities,chronichealth
conditionsandtothefrailelderly.
ABOUT CHLP
O U R S T O R Y
WWW.CHLP.ORG
3
53
MISSION
Toprovidelegalandadvocacy
services,training,education,and
relatedactivitiestopersonswith
disabilities,chronichealth
conditionsandtothefrailelderly,
andincertainissues,to
organizationsrepresentingtheir
interestswithanemphasisonthose
mostvulnerableandneedy.
Vision
ToprotecttherightsofNew
Jersey’smostvulnerable
populations,low-income
peoplewithdisabilities,
chronichealthissues,andthe
frailelderly.
MISSION
AND VISION
C o m m u n i t y H e a l t h L a w P r o j e c t
www.chlp.org
4
54
Uniqueholisticneeds
approachtoaddressall
legalissuesourclientsare
facing.
WHAT SETS US APART
H o l i s t i c N e e d s
A p p r o a c h
5
55
FiveRegionalOffices– Bloomfield,
Elizabeth,Neptune,Hamilton,Westmont
FourSatelliteOffices– Hoboken, Mt.Holly,
TomsRiver,Galloway
OneAdministrativeOffice– SouthOrange
OUR OFFICES
W e s e r v e t h e e n t i r e
s t a t e o f N e w J e r s e y
Pleasevisitourwebsiteforafulllistofour
offices:www.chlp.org/contact-us
6
56
Apartnershipthatintegrates
apublicinterestattorney
intoahealthcaresetting
andthetreatmentteam.
Abilitytoaddressthesocial
determinantsofhealth.
Medical-
Legal
Partnerships
WWW.CHLP.ORG
7
57
CHLPwillbestartinga
ProBonoAttorneyPilot
Programinour
BloomfieldLocation.
Pleasekeepaneyeon
ourwebsiteformore
information.
Pro Bono
Pilot Program
CommunityHealthLawPro ject
8
58
HOME
CARE
PROGRAM
PrivateDutyNursing
DurableMedicalEquipment
MLTSSApplicationsandAppeals
CounselandAdvice,Brief
Services,andLegal
RepresentationatFairHearings
forLow-IncomeIndividuals
PersonalCareAssistance
9
59
ComprehensiveEvictionDefenseandDiversionProgram(CEDD)
StateWide Program
LegalServicesandNavigatorResources
RepresentingTenantsin
Landlord/TenantMatters
ProvidingAssistance
MaintainingSubsidized
Housing
EvictionAvoidance
Housing
Stability
Programs
WWW.CHLP.ORG
10
60
ProvidinglegalservicestoOceanCounty
seniorsaged60andabove
AGING
PROGRAMS
O c e a n C o u n t y A g i n g
AgingPriorities:toensureelderly
individuals canremaininthecommunity,
managingtheirownaffairsandfunctionina
dignified andindependentmanner
U n i o n C o u n t y D i v i s i o n o n
A g i n g
ProvidinglegalservicestoUnionCounty
seniorsaged60andabove
11
61
Providingcounselandadvice,briefservicesandlegal
representationtolow-incomeindividualswithdisabilitiesin
PublicEntitlementmatters.
SocialSecurity
Benefits
Medicaid/
Medicare
Welfare
FoodStamps/SNAP
Public
Entitlements
WWW.CHLP.ORG
12
62
www.facebook.com/chlporg/
www.linkedin.com/company/community-health-
law-project/
CHLP ON
SOCIAL MEDIA
13
63
CONTACT US
F O R I N Q U I R I E S
chlpinfo@chlp.org
E-MAIL:
973-275-1175
PHONE:
185ValleyStreet,SouthOrange,NJ
ADDRESS:
www.chlp.org
WEB:
14
64
CorporateTransparency
Act– Lawand
Compliance
DEIRDRER.WHEATLEY-LISS, ESQ.,
1
65
ThoughtLeaders
DeirdreR.Wheatley-Liss,Esq.,
LL.MPrincipal,Taxation
drwheatleyliss@pbnlaw.com
(973)889-4278
2
66
CTA- Agenda
qConstitutionality
qPurpose
qLawandRegulations
qWhoneedstocomply?
qComplianceDates
qPenalties
qReportingRequirements
Today’sFocus:
qHighLevelIntroductiontoCTA
qExamplestoassistinissuespottingforclient
qCTASolutions
3
67
CTAOverview
qMostsweepingcounter-terrorismlawsince
USAPATRIOTActof2001.
qWillimpactALLentitiesnototherwise
subjecttofederaloversight:
qLimitedLiabilityCompanies
qLimitedPartnerships
qPrivatecorporations
qNewFederalDatabaseReporting
RequirementsEffectiveJanuary1,2024
qWhoisforminganewentity?
qWhoownsanentity?
qWhocontrolsanentity?
qPenaltiesforNon-Compliance:
q$500perday
qCriminalPenalties
qPlanningOpportunities:
qIntegrateCTACompliance– formation,
ownershipchange,controlchange.
qTrustsarenotReportingCompanies–
restructureentitytoatrust.
qEntitieswithsufficientrevenueandemployees
arenotreportingentities– reorganizerelated
companies.
qTerminate/restructureinactiveentities.
qOutsourceCTAcompliance.
4
68
CTAAnalysis
Reporting
Company?
Included
Applicant
Reporting
BeneficialOwner
Reporting
PenaltiesNon-
Reporting
Excluded/
Exempt
Reporting Madeto:
FinancialCrimes
Enforcement Network
(“FinCEN”),theTreasury
Department’s criminal-
enforcement
Bureau.
Reporting MadeVia:
Beneficial Owner
Information(“BOI”)E-Filing
System
https://www.fincen.gov/boi
5
69
IstheCTA
Constitutional?
qNationalSmallBusinessUnitedv.Yellen,No.5:22-cv-
01448(N.D.Ala.)
qFoundCTAunconstitutionalMarch1,2024.
qBUT– onlyenjoinedFinCENfromenforcingtheCTA
againstthePlaintiffs.
qPlaintiffs:
qNationalSmallBusinessAssociationis“anOhionon-profit
corporationthatrepresentsandprotectstherightsofsmall
businessesacrosstheUnitedStates,”including“over
65,000businessesandentrepreneurslocatedinall50
states.”
qIsaacWinklesisanAlabamaresident,NSBAmember,and
owneroftwosmallbusinesses.
qGovernmentappealedtotheEleventhCircuitMarch
11,2024.
6
70
FinCENResponse– FullSteamAhead
UpdatedMarch11,2024
OnMarch1,2024,inthecaseofNationalSmallBusinessUnitedv.Yellen,No.5:22-cv-01448(N.D.Ala.),afederal
districtcourtintheNorthernDistrictofAlabama,NortheasternDivision,enteredafinaldeclaratoryjudgment,
concludingthattheCorporateTransparencyActexceedstheConstitution’slimitsonCongress’spowerand
enjoiningtheDepartmentoftheTreasuryandFinCENfromenforcingtheCorporateTransparencyActagainstthe
plaintiffs.TheJusticeDepartment,onbehalfoftheDepartmentoftheTreasury,filedaNoticeofAppealonMarch
11,2024.Whilethislitigationisongoing,FinCENwillcontinuetoimplementtheCorporateTransparencyActas
requiredbyCongress,whilecomplyingwiththecourt’sorder.Otherthantheparticularindividualsandentities
subjecttothecourt’sinjunction,asspecifiedbelow,reportingcompaniesarestillrequiredtocomplywiththe
lawandfilebeneficialownershipreportsasprovidedinFinCEN’sregulations.
FinCENiscomplyingwiththecourt’sorderandwillcontinuetocomplywiththecourt’sorderforaslongasit
remainsineffect.Asaresult,thegovernmentisnotcurrentlyenforcingtheCorporateTransparencyActagainst
theplaintiffsinthataction:IsaacWinkles,reportingcompaniesforwhichIsaacWinklesisthebeneficialowneror
applicant,theNationalSmallBusinessAssociation,andmembersoftheNationalSmallBusinessAssociation(asof
March1,2024).Thoseindividualsandentitiesarenotrequiredtoreportbeneficialownershipinformationto
FinCENatthistime.
Update[March11,2024]:ThisnoticewasupdatedonMarch11,2024,toreflectthataNoticeofAppealhasbeen
filedregardingthiscase.
Source:https://www.fincen.gov/boi
7
71
Discussion1- Standing
“
HavingfoundthatWinklesisaregulatedpartyandamemberoftheNSBA,and
thattheNSBAhasassociationalstandingasaresult,theCourtconcludesthatboth
Plaintiffshavestandingtobringtheirconstitutionalclaims.”
qIsaacWinkleshasstandingtochallengetheCTA’sbeneficialownerprovisions
becausethecompelleddisclosureofWinkles’sensitivepersonalinformationto
FinCENisaconcrete,imminentinjurythatistraceabletothegovernment,and
redressablebyafavorabledecision.“AndbecausethereisnodoubttheCTAwill
beappliedwithitsfullforce, “theplaintiffs’fearofprosecution[is]not
imaginaryorwhollyspeculative.””
qNationalSmallBusinessAssociationhasAssociationStanding.“Because
WinklesisamemberoftheNSBAandhasstandingasanindividual,theNSBA
hasassociationalstanding.”
8
72
Discussion2– Constitutionality– Foreign
AffairsPower
qForeignAffairsPowers
qIncorporationisaninternalaffairbydefinition;provinceofthestates.
qCongressionalfindingsareinsufficienttolinktoforeignaffairspowers.
“
Compliancewithinternationalstandardsmaybegoodpolicy,butitisnotenoughtomaketheCTA
“necessary”or“proper.”AsadmirableasCongress’goalsmaybe,thisCourt’sonlyjobistoconsider
whethertheCTAfollowstheConstitution,notwhetheritisgoodpolicy.SeeLesterv.UnitedStates,921
F.3d1306,1318(11thCir.2019)(quotingMarburyv.Madison,5U.S.137,177(1803))(courtsmust“‘say
whatthelawis,’notwhatitshouldbe.”).”(Page24)
9
73
Discussion2– Constitutionality–
CommerceClause
qCommerceClause
qCTAplaintextdoesnotregulatechannelsofcommerce(highways,railroads,airspace,
telecommunications).
qCTAplaintextdoesnotregulateinstrumentalitiesofcommerce(peopleandthingsmovingin
commerce).
qCTAnomentionoftheword“commerce”.
“[Snip]howeasilyCongresscouldhavewrittentheCTAtopassconstitutionalmuster.For
instance,nothinginShultzorAmericanPower&LightCo.wouldbarCongressfromimposing
theCTA’sdisclosurerequirementsonStateentitiesassoonastheyengagedincommerce,orfrom
prohibitingtheuseofinterstatecommercetolaundermoney,“evadetaxes,hide...illicitwealth,
anddefraudemployeesandcustomers.”(Page32-33)”
“BecausetheCTAdoesnotregulatecommerceonitsface,containajurisdictionalhook,orserve
asanessentialpartofacomprehensiveregulatoryscheme,itfallsoutsideCongress’powerto
regulatenon-commercial,intrastateactivity.”(Page49)
10
74
Discussion2– Constitutionality– Taxing
PowersandNecessaryandProperClause
qTaxingPowers
qPenaltiesare nota“tax”.
qCollecting“usefuldata”notincidentaltothecollectionoftax.
“IV.CONCLUSION
TheCorporateTransparencyActisunconstitutionalbecauseitcannotbejustifiedasanexerciseof
Congress’enumeratedpowers.”(Page52)
11
75
Whatisa
TrustedAdvisor
toDo?
Considertheconsequencesoffiling
ornotfiling.
Communicatetoclients.
Cautiousaboutentityformationin
2024ifnotfilingaBOIReport.
12
76
CTATimeframes– FinalRule11.30.2023
EffectiveDate- January1,2024.
qExistingEntities- ReportingCompaniescreatedorregisteredbefore January1,
2024 willhaveoneyear(untilJanuary1,2025)tofiletheirinitialreports
qNewEntities– Createdin2024- ReportingCompaniescreatedorregistered
after January1,2024 andbeforeJanuary1,2025,willhave90 daysafter
receivingnoticeoftheircreationorregistrationtofiletheirinitialreports.
(FinalRule11.30.2023)
qNewEntities– Created2025andafter- ReportingCompaniescreatedor
registeredafter January1,2024 andbeforeJanuary1,2025,willhave30days
afterreceivingnoticeoftheircreationorregistrationtofiletheirinitialreports.
13
77
CTATimeframes– FinalRule11.30.2023
EffectiveDate- January1,2024.
qChangeofBeneficialOwnershipofaReportingCompany- Reporting
Companieshave30daysafterachangeinBeneficialOwnershiptoupdatetheir
filings.
qIfaReportingCompanythathasnot doneinitialfilings,filewithindeadlines.
qIfaReportingCompanythathasdoneinitialfilings,filewithin30days.
PracticeTip.FinCENSmallEntityComplianceGuidehttps://www.fincen.gov/boi/small-
entity-compliance-guide
14
78
CTAPenalties– $500/dayPerReporting
Company
Day Month
Quarter
Year
500 15,000 45,000 182,500
Scope:
>Estimated32.6Millionfilingswillbemadein2024.
>Estimated5Millionnewentitiesformedeachyear2025- 2034.
15
79
CTA– Purpose- Anti-MoneyLaundering
q(1)toimprovecoordinationandinformationsharingamongtheagenciestaskedwith
administeringanti-moneylaunderingandcounteringthefinancingofterrorismrequirements,
theagenciesthatexaminefinancialinstitutionsforcompliancewiththoserequirements,Federal
lawenforcementagencies,nationalsecurityagencies,theintelligencecommunity,andfinancial
institutions;
q(5)toestablishuniformbeneficialownershipinformationreportingrequirementsto—
q(A)improvetransparencyfornationalsecurity,intelligence,andlawenforcementagenciesandfinancial
institutionsconcerningcorporatestructuresandinsightintotheflowofillicitfundsthroughthose
structures;
q(B)discouragetheuseofshellcorporationsasatooltodisguiseandmoveillicitfunds;
q(C)assistnationalsecurity,intelligence,andlawenforcementagencieswiththepursuitofcrimes;and
q(D)protectthenationalsecurityoftheUnitedStates;and
q(6)toestablishasecure,nonpublicdatabaseatFinCENforbeneficialownershipinformation.
SeeThe“WilliamM.(Mac)ThornberryNationalDefenseAuthorizationActforFiscalYear2021,”H.R.6395.
‘‘Anti-MoneyLaunderingActof2020’”Section6002
16
80
CTA– LawandRegulations
qAnti-MoneyLaunderingActof2020(“AMLAct”)
qDivisionFofthe'WilliamM. (Mac)Thornberry NationalDefenseAuthorizationActforFiscalYear
2021‘’
qPublicLaw116-283enactedJanuary1,2021
qCorporateTransparencyAct(AMLActTitleLXIV(Sections6401-6403))
q31U.S.Code§ 5336
qBeneficialOwnershipInformationReportingRequirements – FinalRuleSeptember30,2022-
31CFRPart1010
17
81
CTA– CongressionalIntent
(1)morethan2,000,000corporationsandlimitedliabilitycompaniesarebeingformedunderthe
lawsoftheStateseachyear;
(2)mostorallStatesdonotrequireinformationaboutthebeneficialownersofthecorporations,
limitedliabilitycompanies,orothersimilarentitiesformedunderthelawsoftheState;
(3)malignactorsseektoconcealtheirownershipofcorporations,limitedliabilitycompanies,orother
similarentitiesintheUnitedStatestofacilitateillicitactivity,includingmoneylaundering,the
financingofterrorism,proliferationfinancing,serioustaxfraud,humananddrugtrafficking,
counterfeiting,piracy,securitiesfraud,financialfraud,andactsofforeigncorruption,harmingthe
nationalsecurityinterestsoftheUnitedStatesandalliesoftheUnitedStates;
(4)moneylaunderersandothersinvolvedincommercialactivityintentionallyconducttransactions
throughcorporatestructuresinordertoevadedetection,andmaylayersuchstructures,muchlike
Russiannesting‘‘Matryoshka’’dolls,acrossvarioussecretivejurisdictionssuchthateachtimean
investigatorobtainsownershiprecordsforadomesticorforeignentity,thenewlyidentifiedentityis
yetanothercorporateentity,necessitatingarepeatofthesameprocess;
See Pub.L.116–283,div.F,titleLXIV,§ 6402,Jan.1,2021,134Stat.4604
18
82
CTA– CongressionalIntent
(5)Federallegislationprovidingforthecollectionofbeneficialownershipinformationfor
corporations,limitedliabilitycompanies,orothersimilarentitiesformedunderthelawsoftheStates
isneededto—
◦(A)setaclear,Federalstandardforincorporationpractices;
◦(B)protectvitalUnitesStatesnationalsecurityinterests;
◦(C)protectinterstateandforeigncommerce;
◦(D)betterenablecriticalnationalsecurity,intelligence,andlawenforcementeffortstocountermoney
laundering,thefinancingofterrorism,andotherillicitactivity;and
◦(E)bringtheUnitedStatesintocompliancewithinternationalanti-moneylaunderingandcounteringthe
financingofterrorismstandards;
(6)beneficialownershipinformationcollectedundertheamendmentsmadebythistitleissensitive
informationandwillbedirectlyavailableonlytoauthorizedgovernmentauthorities,subjectto
effectivesafeguardsandcontrols,to—
◦(A)facilitateimportantnationalsecurity,intelligence,andlawenforcementactivities;and
◦(B)confirmbeneficialownershipinformationprovidedtofinancialinstitutionstofacilitatethecomplianceof
thefinancialinstitutionswithanti-moneylaundering,counteringthefinancingofterrorism,andcustomerdue
diligencerequirementsunderapplicablelaw;
See Pub.L.116–283,div.F,titleLXIV,§ 6402,Jan.1,2021,134Stat.4604
19
83
CTA– CongressionalIntent
(7)consistentwithapplicablelaw,theSecretaryoftheTreasuryshall—
◦(A)maintaintheinformationdescribedinparagraph(1)inasecure,nonpublicdatabase,using
informationsecuritymethodsandtechniquesthatareappropriatetoprotectnonclassifiedinformation
systemsatthehighestsecuritylevel;and
◦(B)takeallsteps,includingregularauditing,toensurethatgovernmentauthoritiesaccessingbeneficial
ownershipinformationdosoonlyforauthorizedpurposesconsistentwiththistitle;and
(8)inprescribingregulationstoprovideforthereportingofbeneficialownershipinformation,
theSecretaryshall,tothegreatestextentpracticableconsistentwiththepurposesofthistitle—
◦(A)seektominimizeburdensonreportingcompaniesassociatedwiththecollectionofbeneficial
ownershipinformation;
◦(B)provideclaritytoreportingcompaniesconcerningtheidentificationoftheirbeneficialowners;and
◦(C)collectinformationinaformandmannerthatisreasonablydesignedtogenerateadatabasethatis
highlyusefultonationalsecurity,intelligence,andlawenforcementagenciesandFederalfunctional
regulators.
See Pub.L.116–283,div.F,titleLXIV,§ 6402,Jan.1,2021,134Stat.4604
20
84
CTA– Reporting
Company
21
85
CTA– ReportingCompany- Includes
qAnycorporation,limitedliabilitycompany,or
similarentity:
qcreatedbythefilingofadocumentwitha
secretaryofstateorasimilarofficeunderthe
lawofaStateorIndianTribe;or
qformedunderthelawofaforeigncountryand
registeredtodobusinessintheUnitedStatesby
thefilingofadocumentwithasecretaryofstate
orasimilarofficeunderthelawsofaStateor
IndianTribe.
IncludedEntities:
qC-Corporation
qS- Corporation
qNon-profitcorporation(unlesstaxexempt)
qProfessionalcorporation
qLimitedLiabilityCompany
qLimitedPartnership
qLimitedLiabilityPartnership
qUSregisteredforeignentity
See 31U.S.Code§ 5336(a)(11)(A)
22
86
Reporting
Company
Exemptions
TrustsareNOTReportingEntities.
Trustees,TrustProtectorsand
BeneficiariesmaybeBeneficial
Owners.
23
87
CTA– ReportingCompany- Excludes
qRegisteredorrequiredtoreportunder
SecuritiesExchangeActof1934
qGovernmentorganizationthatexercises
governmentalauthorityonbehalfofthe
UnitedStatesoranysuchIndianTribe,State,
orpoliticalsubdivision
qBankasdefinedinSection3oftheFederal
DepositInsuranceAct,Section2(a)ofthe
InvestmentCompanyActof1940,orSection
202(a)oftheInvestmentAdvisersActof1940
qFederalcreditunionoraStatecreditunionas
definedinSection101oftheFederalCredit
UnionAct
ExcludedEntities:
qPubliccorporations
qGovernmentalentities
qBanks
qFederalorStateCreditUnions
See 31U.S.Code§ 5336(a)(11)(B)(i)– (iv)
24
88
CTA– ReportingCompany– Excludes
(cont’d)
qBankholdingcompanyasdefinedinSection
2oftheBankHoldingCompanyActof1956
qSavingsorLoanholdingcompanyasdefined
insection10(a)oftheHomeOwners’ LoanAct
qMoneytransmittingbusinessregisteredwith
theSecretaryoftheTreasuryundersection
5330ofTitle31,UnitedStatesCode.
qBrokerorDealerasdefinedinSection3and
registeredunderSection15oftheSecurities
ExchangeActof1934.
ExcludedEntities:
qBanks
qFederalorStateCreditUnions
qMoneytransmittingbusiness
qBroker/Dealer
See 31U.S.Code§ 5336(a)(11)(B)(v)– (vii)
25
89
CTA– ReportingCompany– Excludes
(cont’d)
qExchangeorclearingagencyasdefinedin
Section3andregisteredunderSections6or
17AoftheSecuritiesExchangeActof1934.
qAnyotherentityregisteredwiththe
SecuritiesandExchangeCommissionunder
theSecuritiesExchangeActof1934.
qInvestmentCompanyasdefinedinSection3
oftheInvestmentCompanyActof1940oran
InvestmentAdviserasdefinedinSection202
oftheInvestmentAdvisersActof1940,andis
registeredwiththeSecuritiesandExchange
CommissionundertheInvestmentCompany
Actof1940.
ExcludedEntities:
qExchangeorclearingentity
qEntitiesregisteredwiththeSEC
qInvestmentCompanyorInvestmentAdvisor
registeredwiththeSEC
See 31U.S.Code§ 5336(a)(11)(B)(viii)-(x)
26
90
CTA– ReportingCompany– Excludes
(cont’d)
qInvestmentAdvisordescribedinSection203(l)
oftheInvestmentAdvisersActof1940thathas
filedItem10,ScheduleA,andScheduleBofPart
1AofFormADV,oranysuccessorthereto,with
theSecuritiesandExchangeCommission.
qInsuranceCompanyasdefinedinSection2of
theInvestmentCompanyActof1940(15U.S.C.
80a–2)).
qInsuranceProducerthatisauthorizedbya
Stateandsubjecttosupervisionbytheinsurance
commissionerorasimilarofficialoragencyofa
Stateandhasanoperatingpresenceataphysical
officewithintheUnitedStates.
ExcludedEntities:
qInvestmentAdvisor
qInsuranceCompany
qInsuranceProducer
See 31U.S.Code§ 5336(a)(11)(B)(xi)-(xiii)
27
91
CTA– ReportingCompany– Excludes
(cont’d)
qRegisteredentityasdefinedinSection1aof
theCommodityExchangeAct.
qFuturescommissionmerchant,introducing
broker,swapdealer,majorswapparticipant,
commoditypooloperator,orcommodity
tradingadvisorasdefinedinSection1aofthe
CommodityExchangeAct.
qRetailforeignexchangedealer,asdescribed
insection2(c)(2)(B)ofthattheCommodity
ExchangeAct.
ExcludedEntities:
qCommoditiesExchange
qFuturescommissionmerchant
qIntroducingbroker
qSwapdealer
qMajorswapparticipant
qCommoditytradingadvisor
qRetailforeignexchangedealer
See 31U.S.Code§ 5336(a)(11)(B)(xiv)
28
92
CTA– ReportingCompany– Excludes
(cont’d)
qPublicaccountingfirmregisteredinaccordance
withSection102oftheSarbanes-OxleyActof
2002.
qPublicutilitythatprovidestelecommunications
services,electricalpower,naturalgas,orwater
andsewerserviceswithintheUnitedStates.
qFinancialmarketutilitydesignatedbythe
FinancialStabilityOversightCouncilunder
Section804ofthePayment,Clearing,and
SettlementSupervisionActof2010(12U.S.C.
5463);
qPooledinvestmentvehiclethatisoperatedor
advisedbyBank,FederalorStateCreditUnion,
BankHoldingCompanyorMoneyTransmitting
Business.
ExcludedEntities:
qPublicaccountingfirm.
qPublicutility.
qFinancialmarketutility.
qPooledinvestmentvehicle.
See 31U.S.Code§ 5336(a)(11)(B)(xv)-(xviii)
29
93
CTA– ReportingCompany– Excludes
(cont’d)
qTaxexemptorganizationdescribedinsection
501(c)oftheInternalRevenueCodeof1986
(“Code”)andexemptfromtaxundersection
501(a)ofsuchCode,exceptthatinthecaseof
anysuchorganizationthatlosesanexemption
fromtax,suchorganizationshallbeconsidered
tobecontinuedtobedescribedinthissubclause
forthe180- dayperiodbeginningonthedateof
thelossofsuchtax-exemptstatus.
qPoliticalorganizationasdefinedinSection
527(e)(1)oftheCodethatisexemptfromtax
undersection527(a)theCode.
qCharitabletruststrustdescribedinparagraph
(1)or(2)ofSection4947(a)oftheCode.
ExcludedEntities:
qTax-Exemptorganization
qPoliticalorganization.
qCharitableTrust
qCharitableLead/RemainderUnitrust
qCharitableLead/RemainderAnnuityTrust
See 31U.S.Code§ 5336(a)(11)(B)(xix)
30
94
CTA– ReportingCompany– Excludes
(cont’d)
qSupportingentityforatax-exempt
organization(501(c),PoliticalOrganization,
CharitableTrust)that:
qoperatesexclusivelytoprovidefinancial
assistanceto,orholdgovernancerightsovera
tax-exemptorganization
qisaUnitedStatesperson
qisbeneficiallyownedorcontrolledexclusively
by1ormoreUnitedStatespersonsthatare
UnitedStatescitizensorlawfullyadmittedfor
permanentresidence;
qderivesatleastamajorityof itsfundingor
revenuefrom1ormoreUnitedStatespersons
thatareUnitedStatescitizensorlawfully
admittedforpermanentresidence
ExcludedEntities:
qSupportingorganizationtotax-exempt
organizations
See 31U.S.Code§ 5336(a)(11)(B)(xx)
31
95
Example– TaxExemptEntity
X– Individual
Y– Individual
Non-ProfitN:
•DECorporation
•Employees– 5FTE
•Revenue- $1million
•HasavalidIRSLetterof
Exemption
Non-ProfitN
32
96
Example– TaxExemptEntity
X– Individual
Y– Individual
Non-ProfitN:
•DECorporation
•Employees– 5FTE
•Revenue- $1million
•Status
•AppliedforIRSLetterof
Exemption;or
•IRSLetterofExemption
Revoked
Non-ProfitN
33
97
CTA– ReportingCompany– Excludes
(cont’d)
qLargecompanyentitythat:
qemploysmorethan20employeesonafull-time
basisintheUnitedStates;
qhasmorethan$5,000,000ingrossreceiptsor
salesintheaggregate,includingthereceiptsor
salesof—
qotherentitiesownedbytheentity;and
qotherentitiesthroughwhichtheentity
operates;and
qhasanoperatingpresenceataphysicaloffice
withintheUnitedStates;
qSubsidiaryentitiesexclusivelyownedor
controlledbynon-ReportingCompanies
ExcludedEntities:
qLargeoperatingcompanieswithatleast20
employeesand$5millionofgrossrevenue.
qNOTE- Fulltimeemployesaredefinedunder
AffordableCareAct
qSubsidiariestonon-ReportingCompanies
See 31U.S.Code§ 5336(a)(11)(B)(xxi)-(xxii)
34
98
Example– LargeReportingCompany–
CompanyA
X– Individual
Y– Individual
CompanyA:
•DELLC
•Employees– 50FTE
•Revenue- $7million
•USAddress
X
50%
CompanyA
Y
50%
35
99
Example– LargeReportingCompany–
CompanyA
X– Individual
Y– Individual
CompanyA:
•DELLC
•Employees– 20 FTE
•Revenue- $7million
•USAddress
X
50%
CompanyA
Y
50%
36
100
Example– LargeReportingCompany–
CompanyS
X– Individual
Y– Individual
CompanyA:
•DELLC
•Employees– 50 FTE
•Revenue- $7million
•USAddress
CompanyS:
•DELLC
•Employees– 10FTE
•Revenue- $1million
•USAddress
X
50%
CompanyA
Y
50%
CompanyS
100%
37
101
Example– LargeReportingCompany–
CompanyAandS
X– Individual
Y– Individual
CompanyA:
•DELLC
•Employees– 50 FTE
•Revenue- $4million
•USAddress
CompanyS:
•DELLC
•Employees– 10FTE
•Revenue- $3million
•USAddress
X
50%
CompanyA
Y
50%
CompanyS
100%
38
102
Example– LargeReportingCompany–
CompanyAandS
X– Individual
Y– Individual
CompanyA:
•DELLC
•Employees– 10 FTE
•Revenue- $4million
•USAddress
CompanyS:
•DELLC
•Employees– 50 FTE
•Revenue- $3million
•USAddress
X
50%
CompanyA
Y
50%
CompanyS
100%
39
103
Example– LargeReportingCompany–
CompanyAandS
X– Individual
Y– Individual
CompanyA:
•DELLC
•Employees– 10FTE
•Revenue- $6million
•USAddress
CompanyS:
•DELLC
•Employees– 50FTE
•Revenue- $6million
•USAddress
X
50%
CompanyA
Y
50%
CompanyS
100%
40
104
CTA– ReportingCompany– Excludes
(cont’d)
qInactiveEntity:
qinexistenceforover1year;
qnotengagedinactivebusiness;
qnotowned,directlyorindirectly,byaforeign
person;
qhasnot,inthepreceding12-monthperiod,
experiencedachangeinownership;
qhasnot,inthepreceding12-monthperiod,sentor
receivedfundsinanamountgreaterthan$1,000
(includingallfundssenttoorreceivedfromany
sourcethroughafinancialaccountoraccountsin
whichtheentity,oranaffiliateoftheentity,
maintainsaninterest);
qdoesnototherwiseholdanykindortypeofassets,
includinganownershipinterestinanycorporation,
limitedliabilitycompany,orothersimilarentity;
ExcludedEntities:
qInactiveEntitywithnoassets
See 31U.S.Code§ 5336(a)(11)(B)(xxiii)
41
105
Example– InactiveEntity
X– IndividualUSPerson
Y– IndividualUSPerson
CompanyI:
•DELLCsince2020with
thesameowners
•Employees– 0FTE
•Revenue- $0million
•USAddress
•Asset- none
X
50%
CompanyI
Y
50%
42
106
Example– InactiveEntity
X– IndividualUSPerson
Y– IndividualUSPerson
CompanyI:
•DELLCsince2020with
thesameowners
•Employees– 0FTE
•Revenue- $0million
•USAddress
•Asset– UnimprovedReal
Estate
X
50%
CompanyI
Y
50%
43
107
CTA– ReportingCompany– Excludes
(cont’d)
qAnyentityorclassofentitiesthatthe
SecretaryoftheTreasury,withthewritten
concurrenceoftheAttorneyGeneralandthe
SecretaryofHomelandSecurity,has,by
regulation,determinedshouldbeexempt
becauserequiringbeneficialownership
informationfromtheentityorclassofentities:
qwouldnotservethepublicinterest;and
qwouldnotbehighlyusefulinnationalsecurity,
intelligence,andlawenforcementagencyefforts
todetect,prevent,orprosecutemoney
laundering,thefinancingofterrorism,
proliferationfinance,serioustaxfraud,orother
crimes.
ExcludedEntities:
qOtherwiseexemptedbyregulation
See 31U.S.Code§ 5336(a)(11)(B)(xxiv)
44
108
ReportingCompanyExclusions-
Summary
qPubliccorporations
qGovernmentalentities
qBanks
qFederalorStateCreditUnions
qBanks
qFederalorStateCreditUnions
qMoneytransmittingbusiness
qBroker/Dealer
qInvestmentAdvisor
qInsuranceCompany
qInsuranceProducer
qCommoditiesExchange
qFuturescommissionmerchant
qIntroducingbroker
qSwapdealer
qMajorswapparticipant
qCommoditytradingadvisor
qRetailforeignexchangedealer
45
109
ReportingCompanyExclusions–
Summary(cont’d)
qPublicaccountingfirm.
qPublicutility.
qFinancialmarketutility.
qPooledinvestmentvehicle.
qTax-Exemptorganization
qPoliticalorganization.
qCharitableTrust.
qCharitableLead/RemainderUnitrust.
qCharitableLead/RemainderAnnuityTrust.
qSupportingorganizationtotax-exempt
organizations.
qLargeoperatingcompanieswithatleast20
employeesand$5millionofgrossrevenue.
qSubsidiariestonon-ReportingCompanies.
qInactiveEntitywithnoassets.
qOtherwiseexemptedbyregulation.
46
110
Applicant
qAnypersonwhocreatesanentityisan
“Applicant”
qAnyApplicantmustbedisclosedonaFinCEN
Report.
qApplicantDefinition:Anyindividualwho:
qFilesanapplicationtoformacorporation,limited
liabilitycompany,orothersimilarentityunderthe
lawsofaStateorIndianTribe;or
qRegistersorfilesanapplicationtoregistera
corporation,limitedliabilitycompany,orother
similarentityformedunderthelawsofaforeign
countrytodobusinessintheUnitedStatesbyfiling
adocumentwiththesecretaryofstateorsimilar
officeunderthelawsofaStateorIndianTribe.
PracticalConsiderationsinyourPractice.
Applicantsinclude:
qAttorneyswhofileordirectotherstofile
CertificatesofFormation/Organizationor
amendmentstosame.
qNon-attorneystaffwhofileCertificatesof
Formation/Organizationoramendmentsto
same.
See 31U.S.Code§ 5336(a)(2)
47
111
Applicant
DecisionTree
PracticeTip:
AllpotentialApplicants
obtainaFinCENIdentifier
•Singleprocessforentity
formation/CTAfilingbeing
developed.
48
112
BeneficialOwner- Includes
qAnyindividual
qDirectlyorindirectly,throughanycontract,
arrangement,understanding,relationship,or
otherwise
qexercisessubstantialcontrolovertheentity;or
qownsorcontrolsnotlessthan25percentofthe
ownershipinterestsoftheentity
BeneficialOwners:
qIndividual
qExercisessubstantialcontrol
qTitle
qRole
qAbilitytochangemanagement(e.g. voting
agreement,Trustee,TrustProtector)
qOwnsorcontrols25%ormoreofownership
interestsintheentity
qDirectownership
qIndirectownershipthroughanEntity
qIndirectownershipthroughaTrust
See 31U.S.Code§ 5336(a)(3)
49
113
BeneficialOwner–
SubstantialControl
– Definition
Reportingcompaniesarerequiredtoidentifyall
individualswhoexercisesubstantialcontrolover
thecompany.Thereisnolimittothenumberof
individualswhocanbereportedforexercising
substantialcontrol.Anindividualexercises
substantialcontroloverareportingcompanyif
theindividualmeetsanyoffourgeneralcriteria:
(1)theindividualisaseniorofficer;
(2)theindividualhasauthoritytoappointor
removecertainofficersoramajorityofdirectors
ofthereportingcompany;
(3)theindividualisanimportantdecision-maker;
or
(4)theindividualhasanyotherformof
substantialcontroloverthereportingcompany.
50
114
BeneficialOwner
– Substantial
ControlDecision
Tree
Notefortrusts:aTrustee
ofatrustorsimilar
arrangementmayexercise
substantialcontrolovera
reportingcompany.
51
115
Example– SubstantialControl- Simple
X– Individual
Y– Individual
CompanyB:
•DELLC
•Governance– Member
Managed
X
50%
CompanyB
Y
50%
52
116
Example– SubstantialControl– Non-Owner
IndividualwithSubstantialControl
X– Individual
Y– Individual
CompanyB:
•DECorporation
•Governance– Board
consistingindividualsX,
Y,Z
•President- P
X
50%
CompanyB
Y
50%
53
117
Example– SubstantialControl- – Non-
OwnerEntitywithSubstantialControl
X– Individual
Y– Individual
CompanyB:
•DECorporation
•Governance– Board
consistingindividualsX,
Y,Z
•President– P
•AngelInvestor–
individualA– Can
replacetheBoard
X
50%
CompanyB
Y
50%
A
54
118
Example– SubstantialControl
X– Individual
Y– Individual
CompanyB:
•DECorporation
•Governance– Board
consistingindividualsX,Y,
Z
•President– P
•AngelInvestor– Company
AI– CanreplacetheBoard
•Ownedandmember
managedindividualsD
andE
X
50%
CompanyB
Y
50%
AI
D E
55
119
Example– SubstantialControl
X– Individual
Y– Individual
CompanyB:
•DECorporation
•Governance– Board
consistingindividualsX,
Y,Z
•President– P
•AngelInvestor–
CompanyAI– Can
replacetheBoard
X
50%
CompanyB
Y
50%
56
120
Example– SubstantialControl
X–LLCownedby
individualsFandG
Y– Individual
CompanyB:
•DECorporation
•Governance– Board
consistingindividualsX,
Y,Z
•President- P
X,LLC
50%
CompanyB
Y
50%
F G
57
121
Example– SubstantialControl
X–LLCownedby
individualsFandG
Y–TrustwithTas
TrusteeandTPasTrust
Protector
CompanyB:
•DECorporation
•Governance– Board
consistingindividualsX,
Y,Z
•President- P
X,LLC
50%
CompanyB
YTrust
50%
F G T TP
58
122
BeneficialOwner–
OwnershipInterest
– Definition
Reportingcompaniesarerequiredto
identifyallindividualswhoownor
controlatleast25percentofthe
ownershipinterestsofthecompany.Any
ofthefollowingmaybeanownership
interest:equity,stock,orvotingrights;a
capitalorprofitinterest;convertible
instruments;optionsorothernon-
bindingprivilegestobuyorsellanyof
theforegoing;andanyotherinstrument,
contract,orothermechanismusedto
establishownership.Areporting
companymayhavemultipletypesof
ownershipinterests.
59
123
BeneficialOwner–
OwnershipInterest
– DecisionTree
Notefortrusts:Thefollowingindividuals
mayholdownershipinterestsinareporting
companythroughatrustorsimilar
arrangement:
•Atrusteeorotherindividualwiththe
authoritytodisposeoftrustassets.
•Abeneficiarywhoisthesolepermissible
recipientoftrustincomeandprincipalor
whohastherighttodemandadistribution
oforwithdrawsubstantiallyallofthetrust
assets.
•Agrantororsettlorwhohastherightto
revokeorotherwisewithdrawtrustassets.
60
124
BeneficialOwner- Excludes
qMinorchild,asdefinedintheStateinwhich
theentityisformed,iftheinformationofthe
parentorguardianoftheminorchildisreported.
qIndividualactingasanominee,intermediary,
custodian,oragentonbehalfofanother
individual.
qIndividualactingsolelyasanemployeeofa
ReportingCompanyandwhosecontroloveror
economicbenefitsfromsuchentityisderived
solelyfromtheemploymentstatusoftheperson.
qIndividualwhoseonlyinterestintheReporting
Companyisthrougharightofinheritance.
qAcreditorofaReportingCompany,unlessthe
creditormeetstherequirementsof
subparagraph(A).
NotBeneficialOwners:
qMinorChild(parent’sinformationreported)
qNominee
qIntermediary
qCustodian
qAgent
qAttorney-in-Fact
qEmployeeinacontrolposition
qContingentbeneficiary
qCreditor
See 31U.S.Code§ 5336(a)(3)
61
125
Example– OwnershipInterest- Simple
X– Individual
Y– Individual
CompanyB:
•DELLC
•EquityGrants- None
X
50%
CompanyB
Y
50%
62
126
Example– OwnershipInterest-
ConvertibleEquitybyIndividual
X– Individual
Y– Individual
CompanyB:
•DELLC
•EquityGrants- None
•AngelInvestor–
individualA– Convertible
Notefor30%
X
50%
CompanyB
Y
50%
A
63
127
Example– OwnershipInterest-
ConvertibleEquitybyIndividual
X– Individual
Y– Individual
CompanyB:
•DECorporation
•Governance– Board
consistingindividualsX,Y,Z
•President– P
•AngelInvestor– CompanyAI
– ConvertibleNotefor30%
•Ownedandmember
managedindividualsDandE
X
50%
CompanyB
Y
50%
AI
D E
64
128
Example– OwnershipInterest– Entity
Owner
X–LLCownedby
individualsFandG
Y– Individual
CompanyB:
•DELLC
•EquityGrants- None
X,LLC
50%
CompanyB
Y
50%
F G
65
129
Example– OwnershipInterest– Entity
Owner
X–LLCownedby
individualsFandG
Y–TrustwithB1andB2
asBeneficiaries
CompanyB:
•DELLC
•EquityGrants- None
X,LLC
50%
CompanyB
YTrust
50%
F G B1 B2
66
130
Beneficial
Ownership
SecureSystem
(BOSS)
CTA'sprovisionsrequiring
entitiestoreportinformation
abouttheirbeneficialowners
andtheindividualswhocreated
theentity(together,“beneficial
ownershipinformation”or
“BOI”).
FinCENdevelopedtheBeneficial
OwnershipSecureSystem
(BOSS)toreceive,store,and
maintainBOI.Itisopenfor
businessaofJanuary1,2024.
67
131
Applicant
Reporting
Notallreportingcompaniesarerequiredtoreport
theircompanyapplicantstoFinCEN.
Areportingcompanyisrequiredtoreportits
companyapplicantsifitiseithera:
•domesticreportingcompanycreatedonorafter
January1,2024;or
•foreignreportingcompanyfirstregisteredtodo
businessintheUnitedStatesonorafterJanuary
1,2024.
Areportingcompanyisnot requiredtoreportits
companyapplicantsifitiseithera:
•domesticreportingcompanycreatedbefore
January1,2024;or
•foreignreportingcompanyfirstregisteredtodo
businessintheUnitedStatesbeforeJanuary1,
2024.
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132
ReportingCompanyReporting–
RequiredInformation
InformationReportedonaFinCENReport:
qFullLegalName
qAnytradename/DBAname
qCompleteUSaddress.
qJurisdictionofFormation.
qForforeignReportingCompany– jurisdictionoffirstregistration.
qTaxIdentifyingNumber(“TIN”)/EIN:
qForforeignReportingCompanywithoutaTIN– TINissuedbyforeignjurisdictionandnameof
jurisdiction
See 31U.S.Code§ 5336(b)(2)(A);31U.S.Code§ 5336(a)(1)
69
133
BeneficialOwner– RequiredInformation
InformationReportedonaFinCENReport:
qFullLegalName
qDateofBirth
qResidentialorbusinessstreetaddressasof
thedateofthereport.
qIdentifyingNumber– either:
qUniqueidentifyingnumberfromanAcceptable
IdentificationDocument,OR
qFinCENidentifier
qImageofAcceptableIdentificationDocument
– ANonexpired:
qPassportissuedbytheUnitedStates;
qIdentificationdocumentissuedbyaState,local
government,orIndianTribetotheindividual
actingforthepurposeofidentificationofthat
individual;
qDriver’slicenseissuedbyaState;or
qIftheindividualdoesnothaveadocument
describedinsubparagraph(A),(B),or(C),a
passportissuedbyaforeigngovernment
See 31U.S.Code§ 5336(b)(2)(A);31U.S.Code§ 5336(a)(1)
70
134
Applicant– RequiredInformation
InformationReportedonaFinCENReport:
qFullLegalName
qDateofBirth
qForcompanyapplicants(e.g.paralegal)who
formorregisteranEntityinthecourseoftheir
businessabusinessstreetaddress.
qUniqueIdentifyingNumber– either:
qUniqueidentifyingnumberfromanAcceptable
IdentificationDocument,OR
qFinCENidentifier
qImageofAcceptableIdentificationDocument
– ANonexpired:
qPassportissuedbytheUnitedStates;
qIdentificationdocumentissuedbyaState,local
government,orIndianTribetotheindividual
actingforthepurposeofidentificationofthat
individual;
qDriver’slicenseissuedbyaState;or
qIftheindividualdoesnothaveadocument
describedinsubparagraph(A),(B),or(C),a
passportissuedbyaforeigngovernment
See 31U.S.Code§ 5336(b)(2)(A);31U.S.Code§ 5336(a)(1)
71
135
BeneficialOwnerandApplicant
Reporting– FinCENIdentifier
qSimilarto aPTINwhenfilingataxreturn,an
individualcanrequestaFinCENidentifierthat
canbeusedforFinCENreportingsothattheir
personalinformationdoesnotneedtobe
disclosedonareportforaReportingCompany.
qIndividualprovidesBeneficialOwnerRequired
InformationtoFinCENandFinCENissuesunique
identifier.
qAnindividualmayusetheFinCENidentifier
insteadofreportingtheBeneficialOwner
/ApplicantRequiredInformationtoFinCEN
qAReportingCompanymayusetheFinCEN
identifierofanindividualinlieuofreportingthe
BeneficialOwner/ApplicantRequired
InformationtoFinCEN.
WhoshouldobtainaFinCENidentifierinyour
practice?
qAttorneyswhofileordirectotherstofile
CertificatesofFormation/Organizationor
amendmentstosame.
qNon-attorneystaffwhofileCertificatesof
Formation/Organizationoramendmentsto
same.
qPracticeAreas:Estateplanning,business
planning,corporatelaw,bankruptcy,litigation,
realestate
PracticeNote:
qMustupdateFinCENwithanychangeofname
oraddress.
See 31U.S.Code§ 5336(b)(3))
72
136
BeneficialOwnerandApplicantReporting–
SpecialReportingConsiderations
SpecialReportingConsiderations:
qIfanownerisanentitythatisnotaReportingCompany,onlyneedlistthenameoftheentity
ownerthatisnotaReportingCompany
qIfaBeneficialOwnerisaminorchildnotrequiredtoreporttheminorchild’sinformationsolongas
havereportedrequiredinformationabouttheminorchild’sparentorguardianandhavenotedthe
reportingontheBOIReport.
qPooledInvestmentvehiclesformedunderthelawofaforeignjurisdictionmustfileawritten
certificationwithFinCENthatprovidesidentificationinformationofanindividualthatexercises
substantialcontroloverthepooledinvestmentvehicle.
qIfthereportingcompanywascreatedorregisteredbeforeJanuary1,2024,youdonotneedto
reportanycompanyapplicantinformationforthereportingcompany.
qIfanentityotherwiseexemptedfromreportingbyregulationfallsoutofthecriteriaforthat
exemption,itmustsubmitaFinCENreport.
See 31U.S.Code§ 5336(b)(2)(B)-(E)
73
137
BeneficialOwnerReporting– Changeof
ReportingCompany
qIfthereisanychangetotherequiredinformationto
befiledaboutaReportingCompany,theReporting
CompanymustfileanupdatedBeneficialOwnerreport
nolaterthan30daysafterthedateonwhichthe
changeoccurred.
qExamples:
qIfsubsidiarythatisexemptfromReportingasbeingowned
byanon-ReportingCompanyisnolongerownedbyaNon-
Reportingcompany,itmustsubmitaFinCENreport.
qIfentityotherwiseexemptedfromreportingbyregulation
fallsoutofthecriteriaforthatexemption,itmustsubmita
FinCENreport,itmustsubmitaFinCENreport.Example:
qLossofLargeCompanyExemption– Prioryearrevenuebelow$5
million.
qLossofLargeCompanyExemption– Reductionfulltimeemployeesto
20orless.
qLossoftax-exemptstatus.
qInactiveentityacquiresanasset.
PracticeTip:
qAmendmenttoAgreementstocreateacovenantby
individualstoprovideChangeofBeneficialOwnership:
qOperatingAgreements
qShareholderAgreements
qPartnershipAgreements
qExecutiveEmploymentAgreements
qBuy-SellAgreements
qOptionAgreements
qConvertibleInvestmentAgreements
qWills
qTrusts
See 31U.S.Code§ 5336(b)(3))
74
138
BeneficialOwnerReporting– Changeof
BeneficialOwner
qIfthereisanychangetotherequiredinformationto
befiledaboutBeneficialOwners,theReporting
CompanymustfileanupdatedBeneficialOwnerreport
nolaterthan30daysafterthedateonwhichthe
changeoccurred.
qExamples:
qNewDBA
qChangeofaddressofEntity
qNewSignificantControlperson(e.g.President,GC,CEO,
COO,CFO)
qSalethatchanges25%ownership
qChangeofBeneficialOwnername,address,unique
identifyingnumber(e.g.marriage,changeofaddress)
includeanimageofthenewidentifyingdocuments(e.g.
driver’slicense,passport).
qMinorBeneficialOwnerreachesageofmajority
PracticeTip– EstatesandTrusts
qNewEquityOwners- WhenaBeneficialOwnerdies,
resultinginchangestotheReportingCompany’s
beneficialowners,reportthosechangeswithin30days
ofwhenthedeceasedbeneficialowner’sestateis
settled.
qUnclearifanExecutor/Administratorwhoexercises
SignificantControlofaReportingCompanymust
reportintheinterim.RecommendfilingBOIReportas
soonasappointed.
qUpdateWillsandTruststoaddacovenantfor
Executor/Trustee/Guardiantosupplyinformationto
fileaBOIReporttoaReportingCompany.
See 31U.S.Code§ 5336(b)(3))
75
139
BeneficialOwnerandApplicant
Reporting– ChangeofFinCENIdentifier
qRequiredbytheindividual whoobtainsaFinCENIdentifiertoreporttoBOSS:
qChangeofname.
qChangeofaddress.
qChangeofUniqueIdentifyingNumber(e.g. driver’slicense/passportnumber).
See 31U.S.Code§ 5336(b)(3))
76
140
UseofBOIbyFinCEN
qInformationMaintained– Information
maintainedbyFinCENontheReporting
Companyterminatedandforatleast5years
thereafter
qConfidentiality – Exceptasauthorizedunder
theCTA,informationmaintainedbyFinCENon
theReportingCompanymaynotbedisclosed.
Considerations:
qDataBreachoftheFinCENdatabase.
qNoticetoFinCENonterminationofentities.
qSecurityprotocolstobeestablishedby
regulation.(31U.S.Code§ 5336(c)(3))
See 31U.S.Code§ 5336(c)(1),(2)(A),(4)
77
141
FinCENSecurityProtocols
qTobeestablishedbyregulation
qHeadofanyrequestingagencytocertifythe
securesystemthestandardsandprocedures
oftherequestingagencyandauditaccess.
qAwrittencertificationofeachauthorized
investigationthatataminimumsetsforthwhy
accesstoBeneficialOwnershipInformationis
relevanttotheinvestigation
qLimitaccessofthescopeofinformation
requestedandtothepersonswhoaredirectly
engagedintheinvestigation
qViolationofProtocols- Anyemployeeor
officerofarequestingagencythatviolatesthe
SecurityProtocols,includingunauthorized
disclosureoruse,shallbesubjecttocriminal
andcivilpenaltiesundersubsection(h)(3)(B).
qTreasurymayrejectarequest:
qFailureintheformofrequest
qInformationbeingrequestedforunlawful
purpose
qOthergoodcause.
See 31U.S.Code§ 5336(c)(3),(4),(6)
78
142
DisclosureofBeneficialInformation
OwnershipbyFinCEN– LawEnforcement
qFederalLawEnforcement:UponrequestfromFederalagencyengagedinnationalsecurity,
intelligence,orlawenforcementactivity,foruseinfurtheranceofsuchactivity.
qState/Local/TribalLawEnforcement:Uponauthorizationbyacourtofcompetent
jurisdictionforaState,local,orTriballawenforcementagencytoseektheinformationina
criminalorcivilinvestigation.
qForeignLawEnforcement:UponrequestfromaFederalagencyinresponsetoarequestfor
assistancefromaforeigncountryinaninvestigationorprosecution.
qFinancialInstitutions:Uponarequestmadebyafinancialinstitution subjecttocustomerdue
diligencerequirements,withtheconsentoftheReportingCompany,tofacilitatethecompliance
ofthe financialinstitutionwithcustomerduediligencerequirementsunderapplicablelaw;or
qRegulatorsofFinancialInstitutions:UponrequestmadebyaFederalfunctionalregulatoror
otherappropriateregulatoryagencyconsistentwiththerequirementsofarequestbya
FinancialInstitutions.
See 31U.S.Code§ 5336(c)(2)(B)
79
143
DisclosureofBeneficialInformation
OwnershipbyFinCEN- Treasury
qGenerallyAvailabletotheIRS- Beneficial
ownershipinformationshallbeaccessiblefor
inspectionordisclosuretoofficersand
employeesoftheDepartmentoftheTreasury
whoseofficialdutiesrequiresuchinspection
ordisclosuresubjecttoproceduresand
safeguardsprescribedbytheSecretaryofthe
Treasury.
qAvailabletotheIRSforTaxAdministration
Purposes- Officersandemployeesofthe
DepartmentoftheTreasurymayobtainaccess
tobeneficialownershipinformationfortax
administrationpurposesinaccordancewith
thissubsection.
Considerations:
qFinCENinformationwillsupportmore
expansiveandcoordinatedauditandlaw
enforcementactivities.
“TheSecretaryoftheTreasuryshall,tothe
greatestextentpracticable,updatethe
informationdescribedinsubsection(b)byworking
collaborativelywithotherrelevantFederal,State,
andTribalagencies.”
See 31U.S.Code§ 5336(c)(5),(d)(1)
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144
CTAReportingViolations
qReportingViolations
Itshallbeunlawfulforanypersonto—
◦(A)willfullyprovide,orattempttoprovide,falseorfraudulentbeneficialownershipinformation,
includingafalseorfraudulentidentifyingphotographordocument,toFinCENinaccordancewith
subsection(b);or
◦(B)willfullyfailtoreportcompleteorupdatedbeneficialownershipinformationtoFinCENin
accordancewithsubsection(b).
q“Willfully”– forpurposesoftheCTAmeansthevoluntary,intentionalviolationofaknownlegal
duty.
See 31U.S.Code§ 5336(h)(1)
81
145
CTAUnauthorizedDisclosure
qUnauthorizedDisclosurebyPersonswithaccesstoFinCENBOSSdatabase:
Exceptasauthorizedbythissection,itshallbeunlawfulforanypersontoknowinglydiscloseor
knowinglyusethebeneficialownershipinformationobtainedbythepersonthrough—
(A)areportsubmittedtoFinCEN
(B)adisclosuremadebyFinCEN
See 31U.S.Code§ 5336(h)(2)
82
146
PenaltiesforReportingViolationsor
UnauthorizedDisclosure
ReportingViolations
Civil - shallbeliabletotheUnitedStatesfora
civilpenaltyofnotmorethan$500foreachday
thattheviolationcontinuesorhasnotbeen
remedied;and
Criminal - maybefinednotmorethan$10,000,
imprisonedfornotmorethan2years,orboth
PracticeNote:
qReportingCompanyobligatedtoReport.
qOnlyaPersoncangotojail.
qPersonsbearultimateresponsibility.
UnauthorizedDisclosure
Civil - shallbeliabletotheUnitedStatesfora
civilpenaltyofnotmorethan$500foreachday
thattheviolationcontinuesorhasnotbeen
remedied;and
Criminal –
(I)shallbefinednotmorethan$250,000,or
imprisonedfornotmorethan5years,orboth;or
(II)whileviolatinganotherlawoftheUnited
Statesoraspartofapatternofanyillegalactivity
involvingmorethan$100,000ina12-month
period,shallbefinednotmorethan$500,000,
imprisonedfornotmorethan10years,orboth.
See 31U.S.Code§ 5336(h)(3)(A)and(B)
83
147
PenaltiesSafeHarbor
GeneralSafeHarbor
qForReportingViolationsonly,not
UnauthorizedDisclosure.
qApersonshallnotbesubjecttocivilor
criminalpenaltiesiftheperson—
qHasreasontobelievethatanyreportsubmitted
bythepersoncontainsinaccurateinformation;
and
qInaccordancewithregulationsissuedbythe
Secretary,voluntarilyandpromptly,andinno
caselaterthan90daysafterthedateonwhich
thepersonsubmittedthereport,submitsa
reportcontainingcorrectedinformation.
ExceptiontoSafeHarbor
qPersonactsforthepurposeofevadingthe
CTAreportingrequirements,and
qPersonhasactualknowledgethatany
informationcontainedinthereportis
inaccurate.
PracticeNote:
qCreatespreadsheetofTrustswith
ownershipofReportingCompanies.
qAnnualcompliancereminders.
qSupportlatefilingsandpenaltynotices.
See 31U.S.Code§ 5336(h)(3)(C)
84
148
ServicesinSupportCTAFilings
§AnalysisandGuidance– CTAReport:
§IsanEntityaReportingCompany?
§WhoaretheBeneficialOwners
§ExistingReportingCompany(formedbefore
January1,2024):
§InitialBOIReport
§GuidanceandsupportonBOIChangeReporting
§NewReportingCompany(formedafter
January1,2024):
§InitialBOIReport(partofEntityFormation)
§GuidanceandsupportonBOIChangeReporting
§AmendmenttoAgreementssoBeneficial
Ownersarerequiredtoprovideinformationto
ReportingCompany(withindemnification
provisionsasapplicable)
§OperatingAgreements
§ShareholderAgreements
§PartnershipAgreements
§ExecutiveEmploymentAgreements
§Buy-SellAgreements
§OptionAgreements
§ConvertibleInvestmentAgreements
§Wills
§Trusts
85
149
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150
Page 474TITLE 31—MONEY AND FINANCE§ 5334
(e) G
UIDANCE
.—The Secretary of the Treasury,
in consultation with the Attorney General and
Federal, State, Tribal, and local law enforce-
ment agencies, shall issue guidance on the re-
quired elements of a keep open request.
(Added Pub. L. 116–283, div. F, title LXIII,
§ 6306(a)(1), Jan. 1, 2021, 134 Stat. 4588.)
§ 5334. Training regarding anti-money laun-
dering and countering the financing of ter-
rorism
(a) T
RAINING
R
EQUIREMENT
.—Each Federal ex-
aminer reviewing compliance with the Bank Se-
crecy Act, as defined in section 6003 of the Anti-
Money Laundering Act of 2020, shall attend ap-
propriate annual training, as determined by the
Secretary of the Treasury, relating to anti-
money laundering activities and countering the
financing of terrorism, including with respect
to—
(1) potential risk profiles and warning signs
that an examiner may encounter during ex-
aminations;
(2) financial crime patterns and trends;
(3) the high-level context for why anti-
money laundering and countering the financ-
ing of terrorism programs are necessary for
law enforcement agencies and other national
security agencies and what risks those pro-
grams seek to mitigate; and
(4) de-risking and the effect of de-risking on
the provision of financial services.
(b) T
RAINING
M
ATERIALS AND
S
TANDARDS
.—The
Secretary of the Treasury shall, in consultation
with the Financial Institutions Examination
Council, the Financial Crimes Enforcement Net-
work, and Federal, State, Tribal, and local law
enforcement agencies, establish appropriate
training materials and standards for use in the
training required under subsection (a).
(Added Pub. L. 116–283, div. F, title LXIII,
§ 6307(a), Jan. 1, 2021, 134 Stat. 4590.)
R
EFERENCES IN
T
EXT
Section 6003 of the Anti-Money Laundering Act of
2020, referred to in subsec. (a), is section 6003 of div. F
of Pub. L. 116–283, which is set out as a note under sec-
tion 5311 of this title. Such section 6003 defines terms,
including the Bank Secrecy Act, as used in div. F of
Pub. L. 116–283.
§ 5335. Prohibition on concealment of the source
of assets in monetary transactions
(a) D
EFINITION OF
M
ONETARY
T
RANSACTION
.—In
this section, the term the term ‘‘monetary
transaction’’—
(1) means the deposit, withdrawal, transfer,
or exchange, in or affecting interstate or for-
eign commerce, of funds or a monetary instru-
ment (as defined in section 1956(c)(5) of title
18) by, through, or to a financial institution
(as defined in section 1956(c)(6) of title 18);
(2) includes any transaction that would be a
financial transaction under section
1956(c)(4)(B) of title 18; and
(3) does not include any transaction nec-
essary to preserve the right to representation
of a person as guaranteed by the Sixth Amend-
ment to the Constitution of the United States.
(b) P
ROHIBITION
.—No person shall knowingly
conceal, falsify, or misrepresent, or attempt to
conceal, falsify, or misrepresent, from or to a fi-
nancial institution, a material fact concerning
the ownership or control of assets involved in a
monetary transaction if—
(1) the person or entity who owns or controls
the assets is a senior foreign political figure,
or any immediate family member or close as-
sociate of a senior foreign political figure, as
set forth in this title or the regulations pro-
mulgated under this title; and
(2) the aggregate value of the assets involved
in 1 or more monetary transactions is not less
than $1,000,000.
(c) S
OURCE OF
F
UNDS
.—No person shall know-
ingly conceal, falsify, or misrepresent, or at-
tempt to conceal, falsify, or misrepresent, from
or to a financial institution, a material fact con-
cerning the source of funds in a monetary trans-
action that—
(1) involves an entity found to be a primary
money laundering concern under section 5318A
or the regulations promulgated under this
title; and
(2) violates the prohibitions or conditions
prescribed under section 5318A(b)(5) or the reg-
ulations promulgated under this title.
(d) P
ENALTIES
.—A person convicted of an of-
fense under subsection (b) or (c), or a conspiracy
to commit an offense under subsection (b) or (c),
shall be imprisoned for not more than 10 years,
fined not more than $1,000,000, or both.
(e) F
ORFEITURE
.—
(1) C
RIMINAL FORFEITURE
.—
(A) I
N GENERAL
.—The court, in imposing a
sentence under subsection (d), shall order
that the defendant forfeit to the United
States any property involved in the offense
and any property traceable thereto.
(B) P
ROCEDURE
.—The seizure, restraint,
and forfeiture of property under this para-
graph shall be governed by section 413 of the
Controlled Substances Act (21 U.S.C. 853).
(2) C
IVIL FORFEITURE
.—
(A) I
N GENERAL
.—Any property involved in
a violation of subsection (b) or (c), or a con-
spiracy to commit a violation of subsection
(b) or (c), and any property traceable thereto
may be seized and forfeited to the United
States.
(B) P
ROCEDURE
.—Seizures and forfeitures
under this paragraph shall be governed by
the provisions of chapter 46 of title 18 relat-
ing to civil forfeitures, except that such du-
ties, under the customs laws described in
section 981(d) of title 18, given to the Sec-
retary of the Treasury shall be performed by
such officers, agents, and other persons as
may be designated for that purpose by the
Secretary of Homeland Security or the At-
torney General.
(Added Pub. L. 116–283, div. F, title LXIII,
§ 6313(a), Jan. 1, 2021, 134 Stat. 4596.)
§ 5336. Beneficial ownership information report-
ing requirements
(a) D
EFINITIONS
.—In this section:
(1) A
CCEPTABLE IDENTIFICATION DOCUMENT
.—
The term ‘‘acceptable identification docu-
ment’’ means, with respect to an individual—
151
Page 475 TITLE 31—MONEY AND FINANCE § 5336
(A) a nonexpired passport issued by the
United States;
(B) a nonexpired identification document
issued by a State, local government, or In-
dian Tribe to the individual acting for the
purpose of identification of that individual;
(C) a nonexpired driver’s license issued by
a State; or
(D) if the individual does not have a docu-
ment described in subparagraph (A), (B), or
(C), a nonexpired passport issued by a for-
eign government.
(2) A
PPLICANT
.—The term ‘‘applicant’’ means
any individual who—
(A) files an application to form a corpora-
tion, limited liability company, or other
similar entity under the laws of a State or
Indian Tribe; or
(B) registers or files an application to reg-
ister a corporation, limited liability com-
pany, or other similar entity formed under
the laws of a foreign country to do business
in the United States by filing a document
with the secretary of state or similar office
under the laws of a State or Indian Tribe.
(3) B
ENEFICIAL OWNER
.—The term ‘‘beneficial
owner’’—
(A) means, with respect to an entity, an
individual who, directly or indirectly,
through any contract, arrangement, under-
standing, relationship, or otherwise—
(i) exercises substantial control over the
entity; or
(ii) owns or controls not less than 25 per-
cent of the ownership interests of the enti-
ty; and
(B) does not include—
(i) a minor child, as defined in the State
in which the entity is formed, if the infor-
mation of the parent or guardian of the
minor child is reported in accordance with
this section;
(ii) an individual acting as a nominee,
intermediary, custodian, or agent on be-
half of another individual;
(iii) an individual acting solely as an em-
ployee of a corporation, limited liability
company, or other similar entity and
whose control over or economic benefits
from such entity is derived solely from the
employment status of the person;
(iv) an individual whose only interest in
a corporation, limited liability company,
or other similar entity is through a right
of inheritance; or
(v) a creditor of a corporation, limited li-
ability company, or other similar entity,
unless the creditor meets the requirements
of subparagraph (A).
(4) D
IRECTOR
.—The term ‘‘Director’’ means
the Director of FinCEN.
(5) F
IN
CEN.—The term ‘‘FinCEN’’ means the
Financial Crimes Enforcement Network of the
Department of the Treasury.
(6) F
IN
CEN
IDENTIFIER
.—The term ‘‘FinCEN
identifier’’ means the unique identifying num-
ber assigned by FinCEN to a person under this
section.
(7) F
OREIGN PERSON
.—The term ‘‘foreign per-
son’’ means a person who is not a United
States person, as defined in section 7701(a) of
the Internal Revenue Code of 1986.
(8) I
NDIAN TRIBE
.—The term ‘‘Indian Tribe’’
has the meaning given the term ‘‘Indian tribe’’
in section 102 of the Federally Recognized In-
dian Tribe List Act of 1994 (25 U.S.C. 5130).
(9) L
AWFULLY ADMITTED FOR PERMANENT RES
-
IDENCE
.—The term ‘‘lawfully admitted for per-
manent residence’’ has the meaning given the
term in section 101(a) of the Immigration and
Nationality Act (8 U.S.C. 1101(a)).
(10) P
OOLED INVESTMENT VEHICLE
.—The term
‘‘pooled investment vehicle’’ means—
(A) any investment company, as defined in
section 3(a) of the Investment Company Act
of 1940 (15 U.S.C. 80a–3(a)); or
(B) any company that—
(i) would be an investment company
under that section but for the exclusion
provided from that definition by paragraph
(1) or (7) of section 3(c) of that Act (15
U.S.C. 80a–3(c)); and
(ii) is identified by its legal name by the
applicable investment adviser in its Form
ADV (or successor form) filed with the Se-
curities and Exchange Commission.
(11) R
EPORTING COMPANY
.—The term ‘‘report-
ing company’’—
(A) means a corporation, limited liability
company, or other similar entity that is—
(i) created by the filing of a document
with a secretary of state or a similar office
under the law of a State or Indian Tribe;
or
(ii) formed under the law of a foreign
country and registered to do business in
the United States by the filing of a docu-
ment with a secretary of state or a similar
office under the laws of a State or Indian
Tribe; and
(B) does not include—
(i) an issuer—
(I) of a class of securities registered
under section 12 of the Securities Ex-
change Act of 1934 (15 U.S.C. 78l); or
(II) that is required to file supple-
mentary and periodic information under
section 15(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o(d));
(ii) an entity—
(I) established under the laws of the
United States, an Indian Tribe, a State,
or a political subdivision of a State, or
under an interstate compact between 2
or more States; and
(II) that exercises governmental au-
thority on behalf of the United States or
any such Indian Tribe, State, or political
subdivision;
(iii) a bank, as defined in—
(I) section 3 of the Federal Deposit In-
surance Act (12 U.S.C. 1813);
(II) section 2(a) of the Investment
Company Act of 1940 (15 U.S.C. 80a–2(a));
or
(III) section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–2(a));
(iv) a Federal credit union or a State
credit union (as those terms are defined in
152
Page 476TITLE 31—MONEY AND FINANCE§ 5336
section 101 of the Federal Credit Union Act
(12 U.S.C. 1752));
(v) a bank holding company (as defined
in section 2 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841)) or a savings
and loan holding company (as defined in
section 10(a) of the Home Owners’ Loan
Act (12 U.S.C. 1467a(a)));
(vi) a money transmitting business reg-
istered with the Secretary of the Treasury
under section 5330;
(vii) a broker or dealer (as those terms
are defined in section 3 of the Securities
Exchange Act of 1934 (15 U.S.C. 78c)) that is
registered under section 15 of that Act (15
U.S.C. 78o);
(viii) an exchange or clearing agency (as
those terms are defined in section 3 of the
Securities Exchange Act of 1934 (15 U.S.C.
78c)) that is registered under section 6 or
17A of that Act (15 U.S.C. 78f, 78q–1);
(ix) any other entity not described in
clause (i), (vii), or (viii) that is registered
with the Securities and Exchange Commis-
sion under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.);
(x) an entity that—
(I) is an investment company (as de-
fined in section 3 of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–3)) or an
investment adviser (as defined in section
202 of the Investment Advisers Act of
1940 (15 U.S.C. 80b–2)); and
(II) is registered with the Securities
and Exchange Commission under the In-
vestment Company Act of 1940 (15 U.S.C.
80a–1 et seq.) or the Investment Advisers
Act of 1940 (15 U.S.C. 80b–1 et seq.);
(xi) an investment adviser—
(I) described in section 203(l) of the In-
vestment Advisers Act of 1940 (15 U.S.C.
80b–3(l)); and
(II) that has filed Item 10, Schedule A,
and Schedule B of Part 1A of Form ADV,
or any successor thereto, with the Secu-
rities and Exchange Commission;
(xii) an insurance company (as defined in
section 2 of the Investment Company Act
of 1940 (15 U.S.C. 80a–2));
(xiii) an entity that—
(I) is an insurance producer that is au-
thorized by a State and subject to super-
vision by the insurance commissioner or
a similar official or agency of a State;
and
(II) has an operating presence at a
physical office within the United States;
(xiv)(I) a registered entity (as defined in
section 1a of the Commodity Exchange Act
(7 U.S.C. 1a)); or
(II) an entity that is—
(aa)(AA) a futures commission mer-
chant, introducing broker, swap dealer,
major swap participant, commodity pool
operator, or commodity trading advisor
(as those terms are defined in section 1a
of the Commodity Exchange Act (7
U.S.C. 1a)); or
(BB) a retail foreign exchange dealer,
as described in section 2(c)(2)(B) of that
Act (7 U.S.C. 2(c)(2)(B)); and
(bb) registered with the Commodity
Futures Trading Commission under the
Commodity Exchange Act (7 U.S.C. 1 et
seq.);
(xv) a public accounting firm registered
in accordance with section 102 of the Sar-
banes-Oxley Act of 2002 (15 U.S.C. 7212);
(xvi) a public utility that provides tele-
communications services, electrical power,
natural gas, or water and sewer services
within the United States;
(xvii) a financial market utility des-
ignated by the Financial Stability Over-
sight Council under section 804 of the Pay-
ment, Clearing, and Settlement Super-
vision Act of 2010 (12 U.S.C. 5463);
(xviii) any pooled investment vehicle
that is operated or advised by a person de-
scribed in clause (iii), (iv), (vii), (x), or (xi);
(xix) any—
(I) organization that is described in
section 501(c) of the Internal Revenue
Code of 1986 (determined without regard
to section 508(a) of such Code) and ex-
empt from tax under section 501(a) of
such Code, except that in the case of any
such organization that loses an exemp-
tion from tax, such organization shall be
considered to be continued to be de-
scribed in this subclause for the 180-day
period beginning on the date of the loss
of such tax-exempt status;
(II) political organization (as defined
in section 527(e)(1) of such Code) that is
exempt from tax under section 527(a) of
such Code; or
(III) trust described in paragraph (1) or
(2) of section 4947(a) of such Code;
(xx) any corporation, limited liability
company, or other similar entity that—
(I) operates exclusively to provide fi-
nancial assistance to, or hold governance
rights over, any entity described in
clause (xix);
(II) is a United States person;
(III) is beneficially owned or controlled
exclusively by 1 or more United States
persons that are United States citizens
or lawfully admitted for permanent resi-
dence; and
(IV) derives at least a majority of its
funding or revenue from 1 or more
United States persons that are United
States citizens or lawfully admitted for
permanent residence;
(xxi) any entity that—
(I) employs more than 20 employees on
a full-time basis in the United States;
(II) filed in the previous year Federal
income tax returns in the United States
demonstrating more than $5,000,000 in
gross receipts or sales in the aggregate,
including the receipts or sales of—
(aa) other entities owned by the enti-
ty; and
(bb) other entities through which the
entity operates; and
(III) has an operating presence at a
physical office within the United States;
153
Page 477 TITLE 31—MONEY AND FINANCE § 5336
1
So in original. Probably should be followed by a comma.
2
So in original.
(xxii) any corporation, limited liability
company, or other similar entity of which
the ownership interests are owned or con-
trolled, directly or indirectly, by 1 or more
entities described in clause (i), (ii), (iii),
(iv), (v), (vii), (viii), (ix), (x), (xi), (xii),
(xiii), (xiv), (xv), (xvi), (xvii)
1
(xix), or
(xxi);
(xxiii) any corporation, limited liability
company, or other similar entity—
(I) in existence for over 1 year;
(II) that is not engaged in active busi-
ness;
(III) that is not owned, directly or indi-
rectly, by a foreign person;
(IV) that has not, in the preceding 12-
month period, experienced a change in
ownership or sent or received funds in an
amount greater than $1,000 (including all
funds sent to or received from any source
through a financial account or accounts
in which the entity, or an affiliate of the
entity, maintains an interest); and
(V) that does not otherwise hold any
kind or type of assets, including an own-
ership interest in any corporation, lim-
ited liability company, or other similar
entity;
(xxiv) any entity or class of entities that
the Secretary of the Treasury, with the
written concurrence of the Attorney Gen-
eral and the Secretary of Homeland Secu-
rity, has, by regulation, determined should
be exempt from the requirements of sub-
section (b) because requiring beneficial
ownership information from the entity or
class of entities—
(I) would not serve the public interest;
and
(II) would not be highly useful in na-
tional security, intelligence, and law en-
forcement agency efforts to detect, pre-
vent, or prosecute money laundering, the
financing of terrorism, proliferation fi-
nance, serious tax fraud, or other crimes.
(12) S
TATE
.—The term ‘‘State’’ means any
State of the United States, the District of Co-
lumbia, the Commonwealth of Puerto Rico,
the Commonwealth of the Northern Mariana
Islands, American Samoa, Guam, the United
States Virgin Islands, and any other common-
wealth, territory, or possession of the United
States.
(13) U
NIQUE IDENTIFYING NUMBER
.—The term
‘‘unique identifying number’’ means, with re-
spect to an individual or an entity with a sole
member, the unique identifying number from
an acceptable identification document.
(14) U
NITED STATES PERSON
.—The term
‘‘United States person’’ has the meaning given
the term in section 7701(a) of the Internal Rev-
enue Code of 1986.
(b) B
ENEFICIAL
O
WNERSHIP
I
NFORMATION
R
E
-
PORTING
.—
(1) R
EPORTING
.—
(A) I
N GENERAL
.—In accordance with regu-
lations prescribed by the Secretary of the
Treasury, each reporting company shall sub-
mit to FinCEN a report that contains the in-
formation described in paragraph (2).
(B) R
EPORTING OF EXISTING ENTITIES
.—In
accordance with regulations prescribed by
the Secretary of the Treasury, any reporting
company that has been formed or registered
before the effective date of the regulations
prescribed under this subsection shall, in a
timely manner, and not later than 2 years
after the effective date of the regulations
prescribed under this subsection, submit to
FinCEN a report that contains the informa-
tion described in paragraph (2).
(C) R
EPORTING AT TIME OF FORMATION OR
REGISTRATION
.—In accordance with regula-
tions prescribed by the Secretary of the
Treasury, any reporting company that has
been formed or registered after the effective
date of the regulations promulgated under
this subsection shall, at the time of forma-
tion or registration, submit to FinCEN a re-
port that contains the information described
in paragraph (2).
(D) U
PDATED REPORTING FOR CHANGES IN
BENEFICIAL OWNERSHIP
.—In accordance with
regulations prescribed by the Secretary of
the Treasury, a reporting company shall, in
a timely manner, and not later than 1 year
after the date on which there is a change
with respect to any information described in
paragraph (2), submit to FinCEN a report
that updates the information relating to the
change.
(E) T
REASURY REVIEW OF UPDATED REPORT
-
ING FOR CHANGES IN BENEFICIAL OWNERSHIP
.—
The Secretary of the Treasury, in consulta-
tion with the Attorney General and the Sec-
retary of Homeland Security, shall conduct
a review to evaluate—
(i) the necessity of a requirement for
corporations, limited liability companies,
or other similar entities to update the re-
port on beneficial ownership information
in paragraph (2), related to a change in
ownership, within a shorter period of time
than required under subparagraph (D), tak-
ing into account the updating require-
ments under subparagraph (D) and the in-
formation contained in the reports;
(ii) the benefit to law enforcement and
national security officials that might be
derived from,
2
and the burden that a re-
quirement to update the list of beneficial
owners within a shorter period of time
after a change in the list of beneficial own-
ers would impose on corporations, limited
liability companies, or other similar enti-
ties; and
(iii) not later than 2 years after the date
of enactment of this section, incorporate
2
into the regulations, as appropriate, any
changes necessary to implement the find-
ings and determinations based on the re-
view required under this subparagraph.
(F) R
EGULATION REQUIREMENTS
.—In pro-
mulgating the regulations required under
subparagraphs (A) through (D), the Sec-
retary of the Treasury shall, to the greatest
extent practicable—
154
Page 478TITLE 31—MONEY AND FINANCE§ 5336
(i) establish partnerships with State,
local, and Tribal governmental agencies;
(ii) collect information described in
paragraph (2) through existing Federal,
State, and local processes and procedures;
(iii) minimize burdens on reporting com-
panies associated with the collection of
the information described in paragraph (2),
in light of the private compliance costs
placed on legitimate businesses, including
by identifying any steps taken to mitigate
the costs relating to compliance with the
collection of information; and
(iv) collect information described in
paragraph (2) in a form and manner that
ensures the information is highly useful
in—
(I) facilitating important national se-
curity, intelligence, and law enforce-
ment activities; and
(II) confirming beneficial ownership in-
formation provided to financial institu-
tions to facilitate the compliance of the
financial institutions with anti-money
laundering, countering the financing of
terrorism, and customer due diligence
requirements under applicable law.
(G) R
EGULATORY SIMPLIFICATION
.—To sim-
plify compliance with this section for re-
porting companies and financial institu-
tions, the Secretary of the Treasury shall
ensure that the regulations prescribed by
the Secretary under this subsection are
added to part 1010 of title 31, Code of Federal
Regulations, or any successor thereto.
(2) R
EQUIRED INFORMATION
.—
(A) I
N GENERAL
.—In accordance with regu-
lations prescribed by the Secretary of the
Treasury, a report delivered under paragraph
(1) shall, except as provided in subparagraph
(B), identify each beneficial owner of the ap-
plicable reporting company and each appli-
cant with respect to that reporting company
by—
(i) full legal name;
(ii) date of birth;
(iii) current, as of the date on which the
report is delivered, residential or business
street address; and
(iv)(I) unique identifying number from
an acceptable identification document; or
(II) FinCEN identifier in accordance with
requirements in paragraph (3).
(B) R
EPORTING REQUIREMENT FOR EXEMPT
ENTITIES HAVING AN OWNERSHIP INTEREST
.—If
an exempt entity described in subsection
(a)(11)(B) has or will have a direct or indirect
ownership interest in a reporting company,
the reporting company or the applicant—
(i) shall, with respect to the exempt enti-
ty, only list the name of the exempt enti-
ty; and
(ii) shall not be required to report the in-
formation with respect to the exempt enti-
ty otherwise required under subparagraph
(A).
(C) R
EPORTING REQUIREMENT FOR CERTAIN
POOLED INVESTMENT VEHICLES
.—Any corpora-
tion, limited liability company, or other
similar entity that is an exempt entity de-
scribed in subsection (a)(11)(B)(xviii) and is
formed under the laws of a foreign country
shall file with FinCEN a written certifi-
cation that provides identification informa-
tion of an individual that exercises substan-
tial control over the pooled investment vehi-
cle in the same manner as required under
this subsection.
(D) R
EPORTING REQUIREMENT FOR EXEMPT
SUBSIDIARIES
.—In accordance with the regu-
lations promulgated by the Secretary, any
corporation, limited liability company, or
other similar entity that is an exempt entity
described in subsection (a)(11)(B)(xxii), shall,
at the time such entity no longer meets the
criteria described in subsection
(a)(11)(B)(xxii), submit to FinCEN a report
containing the information required under
subparagraph (A).
(E) R
EPORTING REQUIREMENT FOR EXEMPT
GRANDFATHERED ENTITIES
.—In accordance
with the regulations promulgated by the
Secretary, any corporation, limited liability
company, or other similar entity that is an
exempt entity described in subsection
(a)(11)(B)(xxiii), shall, at the time such enti-
ty no longer meets the criteria described in
subsection (a)(11)(B)(xxiii), submit to
FinCEN a report containing the information
required under subparagraph (A).
(3) F
IN
CEN
IDENTIFIER
.—
(A) I
SSUANCE OF FINCEN IDENTIFIER
.—
(i) I
N GENERAL
.—Upon request by an indi-
vidual who has provided FinCEN with the
information described in paragraph (2)(A)
pertaining to the individual, or by an enti-
ty that has reported its beneficial owner-
ship information to FinCEN in accordance
with this section, FinCEN shall issue a
FinCEN identifier to such individual or en-
tity.
(ii) U
PDATING OF INFORMATION
.—An indi-
vidual or entity with a FinCEN identifier
shall submit filings with FinCEN pursuant
to paragraph (1) updating any information
described in paragraph (2) in a timely man-
ner consistent with paragraph (1)(D).
(iii) E
XCLUSIVE IDENTIFIER
.—FinCEN
shall not issue more than 1 FinCEN identi-
fier to the same individual or to the same
entity (including any successor entity).
(B) U
SE OF FINCEN IDENTIFIER FOR INDIVID
-
UALS
.—Any person required to report the in-
formation described in paragraph (2) with re-
spect to an individual may instead report
the FinCEN identifier of the individual.
(C) U
SE OF FINCEN IDENTIFIER FOR ENTI
-
TIES
.—If an individual is or may be a bene-
ficial owner of a reporting company by an
interest held by the individual in an entity
that, directly or indirectly, holds an interest
in the reporting company, the reporting
company may report the FinCEN identifier
of the entity in lieu of providing the infor-
mation required by paragraph (2)(A) with re-
spect to the individual.
(4) R
EGULATIONS
.—The Secretary of the
Treasury shall—
(A) by regulation prescribe procedures and
standards governing any report under para-
155
Page 479 TITLE 31—MONEY AND FINANCE § 5336
graph (2) and any FinCEN identifier under
paragraph (3); and
(B) in promulgating the regulations under
subparagraph (A) to the extent practicable,
consistent with the purposes of this sec-
tion—
(i) minimize burdens on reporting com-
panies associated with the collection of
beneficial ownership information, includ-
ing by eliminating duplicative require-
ments; and
(ii) ensure the beneficial ownership in-
formation reported to FinCEN is accurate,
complete, and highly useful.
(5) E
FFECTIVE DATE
.—The requirements of
this subsection shall take effect on the effec-
tive date of the regulations prescribed by the
Secretary of the Treasury under this sub-
section, which shall be promulgated not later
than 1 year after the date of enactment of this
section.
(6) R
EPORT
.—Not later than 1 year after the
effective date described in paragraph (5), and
annually thereafter for 2 years, the Secretary
of the Treasury shall submit to Congress a re-
port describing the procedures and standards
prescribed to carry out paragraph (2), which
shall include an assessment of—
(A) the effectiveness of those procedures
and standards in minimizing reporting bur-
dens (including through the elimination of
duplicative requirements) and strengthening
the accuracy of reports submitted under
paragraph (2); and
(B) any alternative procedures and stand-
ards prescribed to carry out paragraph (2).
(c) R
ETENTION AND
D
ISCLOSURE OF
B
ENEFICIAL
O
WNERSHIP
I
NFORMATION BY
F
IN
CEN.—
(1) R
ETENTION OF INFORMATION
.—Beneficial
ownership information required under sub-
section (b) relating to each reporting company
shall be maintained by FinCEN for not fewer
than 5 years after the date on which the re-
porting company terminates.
(2) D
ISCLOSURE
.—
(A) P
ROHIBITION
.—Except as authorized by
this subsection and the protocols promul-
gated under this subsection, beneficial own-
ership information reported under this sec-
tion shall be confidential and may not be
disclosed by—
(i) an officer or employee of the United
States;
(ii) an officer or employee of any State,
local, or Tribal agency; or
(iii) an officer or employee of any finan-
cial institution or regulatory agency re-
ceiving information under this subsection.
(B) S
COPE OF DISCLOSURE BY FINCEN
.—
FinCEN may disclose beneficial ownership
information reported pursuant to this sec-
tion only upon receipt of—
(i) a request, through appropriate proto-
cols—
(I) from a Federal agency engaged in
national security, intelligence, or law
enforcement activity, for use in further-
ance of such activity; or
(II) from a State, local, or Tribal law
enforcement agency, if a court of com-
petent jurisdiction, including any officer
of such a court, has authorized the law
enforcement agency to seek the informa-
tion in a criminal or civil investigation;
(ii) a request from a Federal agency on
behalf of a law enforcement agency, pros-
ecutor, or judge of another country, in-
cluding a foreign central authority or
competent authority (or like designation),
under an international treaty, agreement,
convention, or official request made by
law enforcement, judicial, or prosecutorial
authorities in trusted foreign countries
when no treaty, agreement, or convention
is available—
(I) issued in response to a request for
assistance in an investigation or pros-
ecution by such foreign country; and
(II) that—
(aa) requires compliance with the
disclosure and use provisions of the
treaty, agreement, or convention, pub-
licly disclosing any beneficial owner-
ship information received; or
(bb) limits the use of the information
for any purpose other than the author-
ized investigation or national security
or intelligence activity;
(iii) a request made by a financial insti-
tution subject to customer due diligence
requirements, with the consent of the re-
porting company, to facilitate the compli-
ance of the financial institution with cus-
tomer due diligence requirements under
applicable law; or
(iv) a request made by a Federal func-
tional regulator or other appropriate regu-
latory agency consistent with the require-
ments of subparagraph (C).
(C) F
ORM AND MANNER OF DISCLOSURE TO FI
-
NANCIAL INSTITUTIONS AND REGULATORY AGEN
-
CIES
.—The Secretary of the Treasury shall,
by regulation, prescribe the form and man-
ner in which information shall be provided
to a financial institution under subpara-
graph (B)(iii), which regulation shall include
that the information shall also be available
to a Federal functional regulator or other
appropriate regulatory agency, as deter-
mined by the Secretary, if the agency—
(i) is authorized by law to assess, super-
vise, enforce, or otherwise determine the
compliance of the financial institution
with the requirements described in that
subparagraph;
(ii) uses the information solely for the
purpose of conducting the assessment, su-
pervision, or authorized investigation or
activity described in clause (i); and
(iii) enters into an agreement with the
Secretary providing for appropriate proto-
cols governing the safekeeping of the in-
formation.
(3) A
PPROPRIATE PROTOCOLS
.—The Secretary
of the Treasury shall establish by regulation
protocols described in paragraph (2)(A) that—
(A) protect the security and confiden-
tiality of any beneficial ownership informa-
tion provided directly by the Secretary;
156
Page 480TITLE 31—MONEY AND FINANCE§ 5336
(B) require the head of any requesting
agency, on a non-delegable basis, to approve
the standards and procedures utilized by the
requesting agency and certify to the Sec-
retary semi-annually that such standards
and procedures are in compliance with the
requirements of this paragraph;
(C) require the requesting agency to estab-
lish and maintain, to the satisfaction of the
Secretary, a secure system in which such
beneficial ownership information provided
directly by the Secretary shall be stored;
(D) require the requesting agency to fur-
nish a report to the Secretary, at such time
and containing such information as the Sec-
retary may prescribe, that describes the pro-
cedures established and utilized by such
agency to ensure the confidentiality of the
beneficial ownership information provided
directly by the Secretary;
(E) require a written certification for each
authorized investigation or other activity
described in paragraph (2) from the head of
an agency described in paragraph (2)(B)(i)(I),
or their designees, that—
(i) states that applicable requirements
have been met, in such form and manner
as the Secretary may prescribe; and
(ii) at a minimum, sets forth the specific
reason or reasons why the beneficial own-
ership information is relevant to an au-
thorized investigation or other activity de-
scribed in paragraph (2);
(F) require the requesting agency to limit,
to the greatest extent practicable, the scope
of information sought, consistent with the
purposes for seeking beneficial ownership in-
formation;
(G) restrict, to the satisfaction of the Sec-
retary, access to beneficial ownership infor-
mation to whom disclosure may be made
under the provisions of this section to only
users at the requesting agency—
(i) who are directly engaged in the au-
thorized investigation or activity de-
scribed in paragraph (2);
(ii) whose duties or responsibilities re-
quire such access;
(iii) who—
(I) have undergone appropriate train-
ing; or
(II) use staff to access the database
who have undergone appropriate train-
ing;
(iv) who use appropriate identity
verification mechanisms to obtain access
to the information; and
(v) who are authorized by agreement
with the Secretary to access the informa-
tion;
(H) require the requesting agency to estab-
lish and maintain, to the satisfaction of the
Secretary, a permanent system of standard-
ized records with respect to an auditable
trail of each request for beneficial ownership
information submitted to the Secretary by
the agency, including the reason for the re-
quest, the name of the individual who made
the request, the date of the request, any dis-
closure of beneficial ownership information
made by or to the agency, and any other in-
formation the Secretary of the Treasury de-
termines is appropriate;
(I) require that the requesting agency re-
ceiving beneficial ownership information
from the Secretary conduct an annual audit
to verify that the beneficial ownership infor-
mation received from the Secretary has been
accessed and used appropriately, and in a
manner consistent with this paragraph and
provide the results of that audit to the Sec-
retary upon request;
(J) require the Secretary to conduct an an-
nual audit of the adherence of the agencies
to the protocols established under this para-
graph to ensure that agencies are requesting
and using beneficial ownership information
appropriately; and
(K) provide such other safeguards which
the Secretary determines (and which the
Secretary prescribes in regulations) to be
necessary or appropriate to protect the con-
fidentiality of the beneficial ownership in-
formation.
(4) V
IOLATION OF PROTOCOLS
.—Any employee
or officer of a requesting agency under para-
graph (2)(B) that violates the protocols de-
scribed in paragraph (3), including unauthor-
ized disclosure or use, shall be subject to
criminal and civil penalties under subsection
(h)(3)(B).
(5) D
EPARTMENT OF THE TREASURY ACCESS
.—
(A) I
N GENERAL
.—Beneficial ownership in-
formation shall be accessible for inspection
or disclosure to officers and employees of
the Department of the Treasury whose offi-
cial duties require such inspection or disclo-
sure subject to procedures and safeguards
prescribed by the Secretary of the Treasury.
(B) T
AX ADMINISTRATION PURPOSES
.—Offi-
cers and employees of the Department of the
Treasury may obtain access to beneficial
ownership information for tax administra-
tion purposes in accordance with this sub-
section.
(6) R
EJECTION OF REQUEST
.—The Secretary of
the Treasury—
(A) shall reject a request not submitted in
the form and manner prescribed by the Sec-
retary under paragraph (2)(C); and
(B) may decline to provide information re-
quested under this subsection upon finding
that—
(i) the requesting agency has failed to
meet any other requirement of this sub-
section;
(ii) the information is being requested
for an unlawful purpose; or
(iii) other good cause exists to deny the
request.
(7) S
USPENSION
.—The Secretary of the Treas-
ury may suspend or debar a requesting agency
from access for any of the grounds set forth in
paragraph (6), including for repeated or serious
violations of any requirement under paragraph
(2).
(8) S
ECURITY PROTECTIONS
.—The Secretary of
the Treasury shall maintain information secu-
rity protections, including encryption, for in-
formation reported to FinCEN under sub-
section (b) and ensure that the protections—
157
Page 481 TITLE 31—MONEY AND FINANCE § 5336
(A) are consistent with standards and
guidelines developed under subchapter II of
chapter 35 of title 44; and
(B) incorporate Federal information sys-
tem security controls for high-impact sys-
tems, excluding national security systems,
consistent with applicable law to prevent
the loss of confidentiality, integrity, or
availability of information that may have a
severe or catastrophic adverse effect.
(9) R
EPORT BY THE SECRETARY
.—Not later
than 1 year after the effective date of the reg-
ulations prescribed under this subsection, and
annually thereafter for 5 years, the Secretary
of the Treasury shall submit to the Committee
on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Serv-
ices of the House of Representatives a report,
which—
(A) may include a classified annex; and
(B) shall, with respect to each request sub-
mitted under paragraph (2)(B)(i)(II) during
the period covered by the report, and con-
sistent with protocols established by the
Secretary that are necessary to protect law
enforcement sensitive, tax-related, or classi-
fied information, include—
(i) the date on which the request was
submitted;
(ii) the source of the request;
(iii) whether the request was accepted or
rejected or is pending; and
(iv) a general description of the basis for
rejecting the such request, if applicable.
(10) A
UDIT BY THE COMPTROLLER GENERAL
.—
Not later than 1 year after the effective date
of the regulations prescribed under this sub-
section, and annually thereafter for 6 years,
the Comptroller General of the United States
shall—
(A) audit the procedures and safeguards es-
tablished by the Secretary of the Treasury
under those regulations, including duties for
verification of requesting agencies systems
and adherence to the protocols established
under this subsection, to determine whether
such safeguards and procedures meet the re-
quirements of this subsection and that the
Department of the Treasury is using bene-
ficial ownership information appropriately
in a manner consistent with this subsection;
and
(B) submit to the Secretary of the Treas-
ury, the Committee on Banking, Housing,
and Urban Affairs of the Senate, and the
Committee on Financial Services of the
House of Representatives a report that con-
tains the findings and determinations with
respect to any audit conducted under this
paragraph.
(11) D
EPARTMENT OF THE TREASURY TESTI
-
MONY
.—
(A) I
N GENERAL
.—Not later than March 31
of each year for 5 years beginning in 2022,
the Director shall be made available to tes-
tify before the Committee on Banking,
Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of
the House of Representatives, or an appro-
priate subcommittee thereof, regarding
FinCEN issues, including, specifically, issues
relating to—
(i) anticipated plans, goals, and re-
sources necessary for operations of
FinCEN in implementing the requirements
of the Anti-Money Laundering Act of 2020
and the amendments made by that Act;
(ii) the adequacy of appropriations for
FinCEN in the current and the previous
fiscal year to—
(I) ensure that the requirements and
obligations imposed upon FinCEN by the
Anti-Money Laundering Act of 2020 and
the amendments made by that Act are
completed as efficiently, effectively, and
expeditiously as possible; and
(II) provide for robust and effective im-
plementation and enforcement of the
provisions of the Anti-Money Laundering
Act of 2020 and the amendments made by
that Act;
(iii) strengthen
2
FinCEN management
efforts, as necessary and as identified by
the Director, to meet the requirements of
the Anti-Money Laundering Act of 2020
and the amendments made by that Act;
(iv) provide
2
for the necessary public
outreach to ensure the broad dissemina-
tion of information regarding any new pro-
gram requirements provided for in the
Anti-Money Laundering Act of 2020 and
the amendments made by that Act, includ-
ing—
(I) educating the business community
on the goals and operations of the new
beneficial ownership database; and
(II) disseminating to the governments
of countries that are allies or partners of
the United States information on best
practices developed by FinCEN related
to beneficial ownership information re-
tention and use;
(v) any policy recommendations that
could facilitate and improve communica-
tion and coordination between the private
sector, FinCEN, and the Federal, State,
and local agencies and entities involved in
implementing innovative approaches to
meet their obligations under the Anti-
Money Laundering Act of 2020 and the
amendments made by that Act, the Bank
Secrecy Act (as defined in section 6003 of
the Anti-Money Laundering Act of 2020),
and other anti-money laundering compli-
ance laws; and
(vi) any other matter that the Director
determines is appropriate.
(B) T
ESTIMONY CLASSIFICATION
.—The testi-
mony required under subparagraph (A)—
(i) shall be submitted in unclassified
form; and
(ii) may include a classified portion.
(d) A
GENCY
C
OORDINATION
.—
(1) I
N GENERAL
.—The Secretary of the Treas-
ury shall, to the greatest extent practicable,
update the information described in sub-
section (b) by working collaboratively with
other relevant Federal, State, and Tribal
agencies.
158
Page 482TITLE 31—MONEY AND FINANCE§ 5336
(2) I
NFORMATION FROM RELEVANT FEDERAL
,
STATE
,
AND TRIBAL AGENCIES
.—Relevant Fed-
eral, State, and Tribal agencies, as determined
by the Secretary of the Treasury, shall, to the
extent practicable, and consistent with appli-
cable legal protections, cooperate with and
provide information requested by FinCEN for
purposes of maintaining an accurate, com-
plete, and highly useful database for beneficial
ownership information.
(3) R
EGULATIONS
.—The Secretary of the
Treasury, in consultation with the heads of
other relevant Federal agencies, may promul-
gate regulations as necessary to carry out this
subsection.
(e) N
OTIFICATION OF
F
EDERAL
O
BLIGATIONS
.—
(1) F
EDERAL
.—The Secretary of the Treasury
shall take reasonable steps to provide notice
to persons of their obligations to report bene-
ficial ownership information under this sec-
tion, including by causing appropriate infor-
mational materials describing such obliga-
tions to be included in 1 or more forms or
other informational materials regularly dis-
tributed by the Internal Revenue Service and
FinCEN.
(2) S
TATES AND INDIAN TRIBES
.—
(A) I
N GENERAL
.—As a condition of the
funds made available under this section,
each State and Indian Tribe shall, not later
than 2 years after the effective date of the
regulations promulgated under subsection
(b)(4), take the following actions:
(i) The secretary of a State or a similar
office in each State or Indian Tribe respon-
sible for the formation or registration of
entities created by the filing of a public
document with the office under the law of
the State or Indian Tribe shall periodi-
cally, including at the time of any initial
formation or registration of an entity, as-
sessment of an annual fee, or renewal of
any license to do business in the United
States and in connection with State or In-
dian Tribe corporate tax assessments or
renewals—
(I) notify filers of their requirements
as reporting companies under this sec-
tion, including the requirements to file
and update reports under paragraphs (1)
and (2) of subsection (b); and
(II) provide the filers with a copy of
the reporting company form created by
the Secretary of the Treasury under this
subsection or an internet link to that
form.
(ii) The secretary of a State or a similar
office in each State or Indian Tribe respon-
sible for the formation or registration of
entities created by the filing of a public
document with the office under the law of
the State or Indian Tribes shall update the
websites, forms relating to incorporation,
and physical premises of the office to no-
tify filers of their requirements as report-
ing companies under this section, includ-
ing providing an internet link to the re-
porting company form created by the Sec-
retary of the Treasury under this section.
(B) N
OTIFICATION FROM THE DEPARTMENT OF
THE TREASURY
.—A notification under clause
(i) or (ii) of subparagraph (A) shall explicitly
state that the notification is on behalf of the
Department of the Treasury for the purpose
of preventing money laundering, the financ-
ing of terrorism, proliferation financing, se-
rious tax fraud, and other financial crime by
requiring nonpublic registration of business
entities formed or registered to do business
in the United States.
(f) N
O
B
EARER
S
HARE
C
ORPORATIONS OR
L
IM
-
ITED
L
IABILITY
C
OMPANIES
.—A corporation, lim-
ited liability company, or other similar entity
formed under the laws of a State or Indian Tribe
may not issue a certificate in bearer form evi-
dencing either a whole or fractional interest in
the entity.
(g) R
EGULATIONS
.—In promulgating regula-
tions carrying out this section, the Director
shall reach out to members of the small business
community and other appropriate parties to en-
sure efficiency and effectiveness of the process
for the entities subject to the requirements of
this section.
(h) P
ENALTIES
.—
(1) R
EPORTING VIOLATIONS
.—It shall be un-
lawful for any person to—
(A) willfully provide, or attempt to pro-
vide, false or fraudulent beneficial ownership
information, including a false or fraudulent
identifying photograph or document, to
FinCEN in accordance with subsection (b);
or
(B) willfully fail to report complete or up-
dated beneficial ownership information to
FinCEN in accordance with subsection (b).
(2) U
NAUTHORIZED DISCLOSURE OR USE
.—Ex-
cept as authorized by this section, it shall be
unlawful for any person to knowingly disclose
or knowingly use the beneficial ownership in-
formation obtained by the person through—
(A) a report submitted to FinCEN under
subsection (b); or
(B) a disclosure made by FinCEN under
subsection (c).
(3) C
RIMINAL AND CIVIL PENALTIES
.—
(A) R
EPORTING VIOLATIONS
.—Any person
that violates subparagraph (A) or (B) of
paragraph (1)—
(i) shall be liable to the United States
for a civil penalty of not more than $500
for each day that the violation continues
or has not been remedied; and
(ii) may be fined not more than $10,000,
imprisoned for not more than 2 years, or
both.
(B) U
NAUTHORIZED DISCLOSURE OR USE VIO
-
LATIONS
.—Any person that violates para-
graph (2)—
(i) shall be liable to the United States
for a civil penalty of not more than $500
for each day that the violation continues
or has not been remedied; and
(ii)(I) shall be fined not more than
$250,000, or imprisoned for not more than 5
years, or both; or
(II) while violating another law of the
United States or as part of a pattern of
any illegal activity involving more than
$100,000 in a 12-month period, shall be fined
159
Page 483 TITLE 31—MONEY AND FINANCE § 5336
not more than $500,000, imprisoned for not
more than 10 years, or both.
(C) S
AFE HARBOR
.—
(i) S
AFE HARBOR
.—
(I) I
N GENERAL
.—Except as provided in
subclause (II), a person shall not be sub-
ject to civil or criminal penalty under
subparagraph (A) if the person—
(aa) has reason to believe that any
report submitted by the person in ac-
cordance with subsection (b) contains
inaccurate information; and
(bb) in accordance with regulations
issued by the Secretary, voluntarily
and promptly, and in no case later
than 90 days after the date on which
the person submitted the report, sub-
mits a report containing corrected in-
formation.
(II) E
XCEPTIONS
.—A person shall not be
exempt from penalty under clause (i) if,
at the time the person submits the re-
port required by subsection (b), the per-
son—
(aa) acts for the purpose of evading
the reporting requirements under sub-
section (b); and
(bb) has actual knowledge that any
information contained in the report is
inaccurate.
(ii) A
SSISTANCE
.—FinCEN shall provide
assistance to any person seeking to submit
a corrected report in accordance with
clause (i)(I).
(4) U
SER COMPLAINT PROCESS
.—
(A) I
N GENERAL
.—The Inspector General of
the Department of the Treasury, in coordi-
nation with the Secretary of the Treasury,
shall provide public contact information to
receive external comments or complaints re-
garding the beneficial ownership informa-
tion notification and collection process or
regarding the accuracy, completeness, or
timeliness of such information.
(B) R
EPORT
.—The Inspector General of the
Department of the Treasury shall submit to
Congress a periodic report that—
(i) summarizes external comments or
complaints and related investigations con-
ducted by the Inspector General related to
the collection of beneficial ownership in-
formation; and
(ii) includes recommendations, in coordi-
nation with FinCEN, to improve the form
and manner of the notification, collection
and updating processes of the beneficial
ownership information reporting require-
ments to ensure the beneficial ownership
information reported to FinCEN is accu-
rate, complete, and highly useful.
(5) T
REASURY OFFICE OF INSPECTOR GENERAL
INVESTIGATION IN THE EVENT OF A
CYBERSECURITY BREACH
.—
(A) I
N GENERAL
.—In the event of a
cybersecurity breach that results in substan-
tial unauthorized access and disclosure of
sensitive beneficial ownership information,
the Inspector General of the Department of
the Treasury shall conduct an investigation
into FinCEN cybersecurity practices that, to
the extent possible, determines any
vulnerabilities within FinCEN information
security and confidentiality protocols and
provides recommendations for fixing those
deficiencies.
(B) R
EPORT
.—The Inspector General of the
Department of the Treasury shall submit to
the Secretary of the Treasury a report on
each investigation conducted under subpara-
graph (A).
(C) A
CTIONS OF THE SECRETARY
.—Upon re-
ceiving a report submitted under subpara-
graph (B), the Secretary of the Treasury
shall—
(i) determine whether the Director had
any responsibility for the cybersecurity
breach or whether policies, practices, or
procedures implemented at the direction
of the Director led to the cybersecurity
breach; and
(ii) submit to Congress a written report
outlining the findings of the Secretary, in-
cluding a determination by the Secretary
on whether to retain or dismiss the indi-
vidual serving as the Director.
(6) D
EFINITION
.—In this subsection, the term
‘‘willfully’’ means the voluntary, intentional
violation of a known legal duty.
(i) C
ONTINUOUS
R
EVIEW OF
E
XEMPT
E
NTITIES
.—
(1) I
N GENERAL
.—On and after the effective
date of the regulations promulgated under
subsection (b)(4), if the Secretary of the Treas-
ury makes a determination, which may be
based on information contained in the report
required under section 6502(c) of the Anti-
Money Laundering Act of 2020 or on any other
information available to the Secretary, that
an entity or class of entities described in sub-
section (a)(11)(B) has been involved in signifi-
cant abuse relating to money laundering, the
financing of terrorism, proliferation finance,
serious tax fraud, or any other financial
crime, not later than 90 days after the date on
which the Secretary makes the determination,
the Secretary shall submit to the Committee
on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Serv-
ices of the House of Representatives a report
that explains the reasons for the determina-
tion and any administrative or legislative rec-
ommendations to prevent such abuse.
(2) C
LASSIFIED ANNEX
.—The report required
by paragraph (1)—
(A) shall be submitted in unclassified
form; and
(B) may include a classified annex.
(j) A
UTHORIZATION OF
A
PPROPRIATIONS
.—There
are authorized to be appropriated to FinCEN for
each of the 3 fiscal years beginning on the effec-
tive date of the regulations promulgated under
subsection (b)(4), such sums as may be necessary
to carry out this section, including allocating
funds to the States to pay reasonable costs re-
lating to compliance with the requirements of
such section.
(Added and amended Pub. L. 116–283, div. F, title
LXIV, § 6403(a), title LXV, § 6509(b), Jan. 1, 2021,
134 Stat. 4605, 4633.)
160
Page 484TITLE 31—MONEY AND FINANCE§ 5340
Editorial Notes
R
EFERENCES IN
T
EXT
The Internal Revenue Code of 1986, referred to in sub-
sec. (a)(7), (11)(B)(xix), (14), is classified generally to
Title 26, Internal Revenue Code. Sections 501(a), (c),
508(a), 527(a), (e)(1), 4947(a), and 7701(a) are classified to
sections 501(a), (c), 508(a), 527(a), (e)(1), 4947(a), and
7701(a), respectively, of Title 26.
The date of enactment of this section, referred to in
subsec. (b)(1)(E)(iii), (5), is the date of enactment of
Pub. L. 116–283, which was approved Jan. 1, 2021.
The Anti-Money Laundering Act of 2020, referred to
in subsecs. (c)(11)(A) and (i)(1), is div. F of Pub. L.
116–283, Jan. 1, 2021, 134 Stat. 4547. Section 6003 of the
Act is set out as a note under section 5311 of this title.
Such section 6003 defines terms, including the Bank Se-
crecy Act, as used in div. F of Pub. L. 116–283. Section
6502(c) of the Act is section 6502(c) of title LXV of div.
F of Pub. L. 116–283, Jan. 1, 2021, 134 Stat. 4627, which
is not classified to the Code. For complete classifica-
tion of this Act to the Code, see Short Title of 2021
Amendment note set out under section 5301 of this title
and Tables.
A
MENDMENTS
2021—Subsec. (j). Pub. L. 116–283, § 6509(b), added sub-
sec. (j).
Statutory Notes and Related Subsidiaries
S
ENSE OF
C
ONGRESS
Pub. L. 116–283, div. F, title LXIV, § 6402, Jan. 1, 2021,
134 Stat. 4604, provided that: ‘‘It is the sense of Con-
gress that—
‘‘(1) more than 2,000,000 corporations and limited li-
ability companies are being formed under the laws of
the States each year;
‘‘(2) most or all States do not require information
about the beneficial owners of the corporations, lim-
ited liability companies, or other similar entities
formed under the laws of the State;
‘‘(3) malign actors seek to conceal their ownership
of corporations, limited liability companies, or other
similar entities in the United States to facilitate il-
licit activity, including money laundering, the fi-
nancing of terrorism, proliferation financing, serious
tax fraud, human and drug trafficking, counter-
feiting, piracy, securities fraud, financial fraud, and
acts of foreign corruption, harming the national secu-
rity interests of the United States and allies of the
United States;
‘‘(4) money launderers and others involved in com-
mercial activity intentionally conduct transactions
through corporate structures in order to evade detec-
tion, and may layer such structures, much like Rus-
sian nesting ‘Matryoshka’ dolls, across various secre-
tive jurisdictions such that each time an investigator
obtains ownership records for a domestic or foreign
entity, the newly identified entity is yet another cor-
porate entity, necessitating a repeat of the same
process;
‘‘(5) Federal legislation providing for the collection
of beneficial ownership information for corporations,
limited liability companies, or other similar entities
formed under the laws of the States is needed to—
‘‘(A) set a clear, Federal standard for incorpora-
tion practices;
‘‘(B) protect vital Unites States national security
interests;
‘‘(C) protect interstate and foreign commerce;
‘‘(D) better enable critical national security, in-
telligence, and law enforcement efforts to counter
money laundering, the financing of terrorism, and
other illicit activity; and
‘‘(E) bring the United States into compliance
with international anti-money laundering and
countering the financing of terrorism standards;
‘‘(6) beneficial ownership information collected
under the amendments made by this title is sensitive
information and will be directly available only to au-
thorized government authorities, subject to effective
safeguards and controls, to—
‘‘(A) facilitate important national security, intel-
ligence, and law enforcement activities; and
‘‘(B) confirm beneficial ownership information
provided to financial institutions to facilitate the
compliance of the financial institutions with anti-
money laundering, countering the financing of ter-
rorism, and customer due diligence requirements
under applicable law;
‘‘(7) consistent with applicable law, the Secretary
of the Treasury shall—
‘‘(A) maintain the information described in para-
graph (1) in a secure, nonpublic database, using in-
formation security methods and techniques that
are appropriate to protect nonclassified informa-
tion systems at the highest security level; and
‘‘(B) take all steps, including regular auditing, to
ensure that government authorities accessing bene-
ficial ownership information do so only for author-
ized purposes consistent with this title; and
‘‘(8) in prescribing regulations to provide for the re-
porting of beneficial ownership information, the Sec-
retary shall, to the greatest extent practicable con-
sistent with the purposes of this title—
‘‘(A) seek to minimize burdens on reporting com-
panies associated with the collection of beneficial
ownership information;
‘‘(B) provide clarity to reporting companies con-
cerning the identification of their beneficial own-
ers; and
‘‘(C) collect information in a form and manner
that is reasonably designed to generate a database
that is highly useful to national security, intel-
ligence, and law enforcement agencies and Federal
functional regulators.’’
[For definition of ‘‘Federal functional regulator’’ as
used in section 6402 of Pub. L. 116–283, set out above, see
section 6003 of Pub. L. 116–283, set out as a Definitions
note under section 5311 of this title.]
R
EPORTING
R
EQUIREMENTS FOR
F
EDERAL
C
ONTRACTORS
Pub. L. 116–283, div. F, title LXIV, § 6403(c), Jan. 1,
2021, 134 Stat. 4623, provided that:
‘‘(1) I
N GENERAL
.—Not later than 2 years after the
date of enactment of this Act [Jan. 1, 2021], the Admin-
istrator for Federal Procurement Policy shall revise
the Federal Acquisition Regulation maintained under
section 1303(a)(1) of title 41, United States Code, to re-
quire any contractor or subcontractor that is subject
to the requirement to disclose beneficial ownership in-
formation under section 5336 of title 31, United States
Code, as added by subsection (a) of this section, to pro-
vide the information required to be disclosed under
such section to the Federal Government as part of any
bid or proposal for a contract with a value threshold in
excess of the simplified acquisition threshold under
section 134 of title 41, United States Code.
‘‘(2) A
PPLICABILITY
.—The revision required under
paragraph (1) shall not apply to a covered contractor or
subcontractor, as defined in section 847[(a)(3)] of the
National Defense Authorization Act for Fiscal Year
2020 (Public Law 116–92) [10 U.S.C. 4819 note], that is
subject to the beneficial ownership disclosure and re-
view requirements under that section.’’
SUBCHAPTER III—MONEY LAUNDERING
AND RELATED FINANCIAL CRIMES
§ 5340. Definitions
For purposes of this subchapter, the following
definitions shall apply:
(1) D
EPARTMENT OF THE TREASURY LAW EN
-
FORCEMENT ORGANIZATIONS
.—The term ‘‘De-
partment of the Treasury law enforcement or-
ganizations’’ has the meaning given to such
term in section 9705(o).
161
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437
32,556,929 × 0.01 = 325,569 and 4,998,468 ×
0.01 = 49,985, respectively.
438
Please see RIA cost analysis for the underlying
sources and analysis related to these estimates.
439
325,569 × (20/60) = 108,535.
440
49,985 × (20/60) = 16,662.
441
12,180 × (10/60) = 2,030.
442
26,575 × (10/60) = 4,429.
443
($56.76 × (20/60)) × 325,569 = $6,159,488.81
and ($56.76 × (20/60)) × 49,985 = $945,666.84.
444
($56.76 × (10/60)) × 12,180 = $115,218.68 and
($56.76 × (10/60)) × 26,575 = $251,386.22.
445
5 U.S.C. 804(2) et seq.
446
5 U.S.C. 801(a)(3).
exclusively than doing so indirectly
through one or more individuals at one
or more reporting companies) and
administrative efficiency (where an
individual is likely to be identified as a
beneficial owner of numerous reporting
companies). Company applicants that
are responsible for registering many
reporting companies may have a similar
incentive to request a FinCEN identifier
in order to limit the number of
companies with access to their personal
information. This reasoning assumes
that there is a one-to-many relationship
between the company applicant and
reporting companies.
Estimated Number of Respondents:
Given the incentives described in the
previous paragraph, which are based on
assumptions, FinCEN estimates that the
number of individuals who will apply
for a FinCEN identifier will likely be
relatively low. FinCEN is estimating that
number to be approximately 1 percent
of the reporting company estimates.
This is the same assumption made by
FinCEN in the NPRM to estimate the
number of individuals applying for a
FinCEN identifier. Given that the
number of reporting companies
estimated in the RIA has increased, this
estimate will increase proportionally.
FinCEN assumes that, similar to
reporting companies’ initial filings,
there would be an initial influx of
applications for a FinCEN identifier that
would then decrease to a smaller annual
rate of requests after Year 1. Therefore,
FinCEN estimates that 325,569
individuals will apply for a FinCEN
identifier during Year 1 and 49,985
individuals will apply for on a FinCEN
identifier annually thereafter.
437
The
total five-year average of expected
FinCEN identifier applications is
105,102. To estimate the number of
updated reports for individuals’ FinCEN
identifier information per year, FinCEN
used the same methodology explained
in the BOI report estimate section to
calculate, and then total, monthly
updates based on the number of FinCEN
identifier applications received in Year
1. However, FinCEN only applied the
monthly probability of 0.0068021 (8.16
percent, the annual likelihood of a
change in address, divided by 12 to find
a monthly rate), as this was the sole
probability of those previously
estimated that would result in a change
to an individual’s identifying
information. This analysis estimated
12,180 updates in Year 1 and 26,575
annually thereafter.
438
The total five-
year average of estimated FinCEN
identifier updates is 23,696.
Estimated Time per Respondent:
FinCEN anticipates that initial FinCEN
identifier applications would require
approximately 20 minutes (10 minutes
to read the form and understand the
information required and 10 minutes to
fill out and file the request, including
attaching an image of an acceptable
identification document), given that the
information to be submitted to FinCEN
would be readily available to the person
requesting the FinCEN identifier.
FinCEN estimates that updates would
require 10 minutes (10 minutes to fill
out and file the update).
Estimated Total Reporting Burden
Hours: FinCEN estimates the total
burden hours of individuals initially
applying for a FinCEN identifier during
Year 1 to be 108,535,
439
with an annual
burden of 16,662 hours thereafter.
440
The five-year average of initial
application burden is 35,034 hours.
FinCEN estimates the burden hours of
individuals updating FinCEN identifier
related information to be 2,030 in Year
1,
441
with an annual burden of 4,429
hours thereafter.
442
The five-year
average of updated application burden
is 3,949 hours. The total five-year
average of time burden is 38,983.
Estimated Total Reporting Cost: The
total cost of FinCEN identifier
applications for individuals in Year 1 is
estimated to be $6.2 million, with an
annual cost of $945,667 thereafter.
443
The five-year average of initial
applications cost is $1,988,431. The
total cost of FinCEN identifier updates
for individuals in Year 1 is estimated to
be $115,219, with an annual cost of
$251,386 thereafter.
444
The five-year
average of updated applications cost is
$224,153. The total five-year average
cost is $2,212,584.
E. Congressional Review Act
Pursuant to the Congressional Review
Act (CRA), OMB’s Office of Information
and Regulatory Affairs has designated
this rule a ‘‘major rule,’’ for purposes of
Subtitle E of the Small Business
Regulatory Enforcement and Fairness
Act of 1996 (also known as the
Congressional Review Act or CRA).
445
Under the CRA, a major rule generally
may take effect no earlier than 60 days
after the rule is published in the Federal
Register.
446
List of Subjects in 31 CFR Parts 1010
Administrative practice and
procedure, Aliens, Authority
delegations (Government agencies),
Banks and banking, Brokers, Business
and industry, Commodity futures,
Currency, Citizenship and
naturalization, Electronic filing, Federal
savings associations, Federal-States
relations, Foreign persons, Holding
companies, Indian-law, Indians,
Indians—tribal government, Insurance
companies, Investment advisers,
Investment companies, Investigations,
Law enforcement, Penalties, Reporting
and recordkeeping requirements, Small
businesses, Securities, Terrorism, Time.
Authority and Issuance
For the reasons set forth in the
preamble, the U.S. Department of the
Treasury and Financial Crimes
Enforcement Network amend 31 CFR
part 1010 as follows:
PART 1010—GENERAL PROVISIONS
■
1. The authority citation for part 1010
is amended to read as follows:
Authority: 12 U.S.C. 1829b and 1951–1959;
31 U.S.C. 5311–5314, 5316–5336; title III,
sec. 314 Pub. L. 107–56, 115 Stat. 307; sec.
701 Pub. L. 114–74, 129 Stat. 599; sec. 6403,
Pub. L. 116–283, 134 Stat. 3388.
■
2. Add § 1010.380 to subpart C to read
as follows:
§ 1010.380 Reports of beneficial
ownership information
(a) Reports required; timing of
reports—(1) Initial report. Each
reporting company shall file an initial
report in the form and manner specified
in paragraph (b) of this section as
follows:
(i) Any domestic reporting company
created on or after January 1, 2024 shall
file a report within 30 calendar days of
the earlier of the date on which it
receives actual notice that its creation
has become effective or the date on
which a secretary of state or similar
office first provides public notice, such
as through a publicly accessible registry,
that the domestic reporting company
has been created.
(ii) Any entity that becomes a foreign
reporting company on or after January 1,
2024 shall file a report within 30
calendar days of the earlier of the date
on which it receives actual notice that
it has been registered to do business or
the date on which a secretary of state or
similar office first provides public
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notice, such as through a publicly
accessible registry, that the foreign
reporting company has been registered
to do business.
(iii) Any domestic reporting company
created before January 1, 2024 and any
entity that became a foreign reporting
company before January 1, 2024 shall
file a report not later than January 1,
2025.
(iv) Any entity that no longer meets
the criteria for any exemption under
paragraph (c)(2) of this section shall file
a report within 30 calendar days after
the date that it no longer meets the
criteria for any exemption.
(2) Updated report. (i) If there is any
change with respect to required
information previously submitted to
FinCEN concerning a reporting
company or its beneficial owners,
including any change with respect to
who is a beneficial owner or
information reported for any particular
beneficial owner, the reporting company
shall file an updated report in the form
and manner specified in paragraph
(b)(3) of this section within 30 calendar
days after the date on which such
change occurs.
(ii) If a reporting company meets the
criteria for any exemption under
paragraph (c)(2) of this section
subsequent to the filing of an initial
report, this change will be deemed a
change with respect to information
previously submitted to FinCEN, and
the entity shall file an updated report.
(iii) If an individual is a beneficial
owner of a reporting company by virtue
of property interests or other rights
subject to transfer upon death, and such
individual dies, a change with respect to
required information will be deemed to
occur when the estate of the deceased
beneficial owner is settled, either
through the operation of the intestacy
laws of a jurisdiction within the United
States or through a testamentary
deposition. The updated report shall, to
the extent appropriate, identify any new
beneficial owners.
(iv) If a reporting company has
reported information with respect to a
parent or legal guardian of a minor child
pursuant to paragraphs (b)(2)(ii) and
(d)(3)(i) of this section, a change with
respect to required information will be
deemed to occur when the minor child
attains the age of majority.
(v) With respect to an image of an
identifying document required to be
reported pursuant to paragraph
(b)(1)(ii)(E) of this section, a change
with respect to required information
will be deemed to occur when the name,
date of birth, address, or unique
identifying number on such document
changes.
(3) Corrected report. If any report
under this section was inaccurate when
filed and remains inaccurate, the
reporting company shall file a corrected
report in the form and manner specified
in paragraph (b) of this section within
30 calendar days after the date on which
such reporting company becomes aware
or has reason to know of the inaccuracy.
A corrected report filed under this
paragraph (a)(3) within this 30-day
period shall be deemed to satisfy 31
U.S.C. 5336(h)(3)(C)(i)(I)(bb) if filed
within 90 calendar days after the date
on which the inaccurate report was
filed.
(b) Content, form, and manner of
reports. Each report or application
submitted under this section shall be
filed with FinCEN in the form and
manner that FinCEN shall prescribe in
the forms and instructions for such
report or application, and each person
filing such report or application shall
certify that the report or application is
true, correct, and complete.
(1) Initial report. An initial report of
a reporting company shall include the
following information:
(i) For the reporting company:
(A) The full legal name of the
reporting company;
(B) Any trade name or ‘‘doing
business as’’ name of the reporting
company;
(C) A complete current address
consisting of:
(1) In the case of a reporting company
with a principal place of business in the
United States, the street address of such
principal place of business; and
(2) In all other cases, the street
address of the primary location in the
United States where the reporting
company conducts business;
(D) The State, Tribal, or foreign
jurisdiction of formation of the reporting
company;
(E) For a foreign reporting company,
the State or Tribal jurisdiction where
such company first registers; and
(F) The Internal Revenue Service (IRS)
Taxpayer Identification Number (TIN)
(including an Employer Identification
Number (EIN)) of the reporting
company, or where a foreign reporting
company has not been issued a TIN, a
tax identification number issued by a
foreign jurisdiction and the name of
such jurisdiction;
(ii) For every individual who is a
beneficial owner of such reporting
company, and every individual who is
a company applicant with respect to
such reporting company:
(A) The full legal name of the
individual;
(B) The date of birth of the individual;
(C) A complete current address
consisting of:
(1) In the case of a company applicant
who forms or registers an entity in the
course of such company applicant’s
business, the street address of such
business; or
(2) In any other case, the individual’s
residential street address;
(D) A unique identifying number and
the issuing jurisdiction from one of the
following documents:
(1) A non-expired passport issued to
the individual by the United States
government;
(2) A non-expired identification
document issued to the individual by a
State, local government, or Indian tribe
for the purpose of identifying the
individual;
(3) A non-expired driver’s license
issued to the individual by a State; or
(4) A non-expired passport issued by
a foreign government to the individual,
if the individual does not possess any of
the documents described in paragraph
(b)(1)(ii)(D)(1), (b)(1)(ii)(D)(2), or
(b)(1)(ii)(D)(3) of this section; and
(E) An image of the document from
which the unique identifying number in
paragraph (b)(1)(ii)(D) of this section
was obtained.
(2) Special rules—(i) Reporting
company owned by exempt entity. If one
or more exempt entities under
paragraph (c)(2) of this section has or
will have a direct or indirect ownership
interest in a reporting company and an
individual is a beneficial owner of the
reporting company exclusively by virtue
of the individual’s ownership interest in
such exempt entities, the report may
include the names of the exempt entities
in lieu of the information required
under paragraph (b)(1) of this section
with respect to such beneficial owner.
(ii) Minor child. If a reporting
company reports the information
required under paragraph (b)(1) of this
section with respect to a parent or legal
guardian of a minor child consistent
with paragraph (d)(3)(i) of this section,
then the report shall indicate that such
information relates to a parent or legal
guardian.
(iii) Foreign pooled investment
vehicle. If an entity would be a reporting
company but for paragraph (c)(2)(xviii)
of this section, and is formed under the
laws of a foreign country, such entity
shall be deemed a reporting company
for purposes of paragraphs (a) and (b) of
this section, except the report shall
include the information required under
paragraph (b)(1) of this section solely
with respect to an individual who
exercises substantial control over the
entity. If more than one individual
exercises substantial control over the
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entity, the entity shall report
information with respect to the
individual who has the greatest
authority over the strategic management
of the entity.
(iv) Company applicant for existing
companies. Notwithstanding paragraph
(b)(1)(ii) of this section, if a reporting
company was created or registered
before January 1, 2024, the reporting
company shall report that fact, but is not
required to report information with
respect to any company applicant.
(3) Contents of updated or corrected
reports—(i) Updated reports—in
general. An updated report required to
be filed pursuant to paragraph (a)(2) of
this section shall reflect any change
with respect to required information
previously submitted to FinCEN
concerning a reporting company or its
beneficial owners.
(ii) Updated reports—newly exempt
entities. An updated report required to
be filed pursuant to paragraph (a)(2)(ii)
of this section shall indicate that the
filing entity is no longer a reporting
company.
(iii) Corrected reports. A corrected
report required to be filed pursuant to
paragraph (a)(3) of this section shall
correct all inaccuracies in the
information previously reported to
FinCEN.
(4) FinCEN identifier—(i) Application.
(A) An individual may obtain a FinCEN
identifier by submitting to FinCEN an
application containing the information
about the individual described in
paragraph (b)(1) of this section.
(B) A reporting company may obtain
a FinCEN identifier by submitting to
FinCEN an application at or after the
time that the entity submits an initial
report required under paragraph (b)(1)
of this section.
(C) Each FinCEN identifier shall be
specific to each such individual or
reporting company, and each such
individual or reporting company
(including any successor reporting
company) may obtain only one FinCEN
identifier.
(ii) Use of the FinCEN identifier. (A)
If an individual has obtained a FinCEN
identifier and provided such FinCEN
identifier to a reporting company, the
reporting company may include such
FinCEN identifier in its report in lieu of
the information required under
paragraph (b)(1) of this section with
respect to such individual.
(B) [Reserved]
(iii) Updates and corrections. (A) Any
individual that has obtained a FinCEN
identifier shall update or correct any
information previously submitted to
FinCEN in an application for such
FinCEN identifier.
(1) If there is any change with respect
to required information previously
submitted to FinCEN in such
application, the individual shall file an
updated application reflecting such
change within 30 calendar days after the
date on which such change occurs.
(2) If any such application was
inaccurate when filed and remains
inaccurate, the individual shall file a
corrected application correcting all
inaccuracies within 30 calendar days
after the date on which the individual
becomes aware or has reason to know of
the inaccuracy. A corrected application
filed under this paragraph within this
30-day period will be deemed to satisfy
31 U.S.C. 5336(h)(3)(C)(i)(I)(bb) if filed
within 90 calendar days after the date
on which the inaccurate application was
submitted.
(B) Any reporting company that has
obtained a FinCEN identifier shall file
an updated or corrected report to update
or correct any information previously
submitted to FinCEN. Such updated or
corrected report shall be filed at the
same time and in the same manner as
updated or corrected reports filed under
paragraph (a) of this section.
(c) Reporting company—(1) Definition
of reporting company. For purposes of
this section, the term ‘‘reporting
company’’ means either a domestic
reporting company or a foreign
reporting company.
(i) The term ‘‘domestic reporting
company’’ means any entity that is:
(A) A corporation;
(B) A limited liability company; or
(C) Created by the filing of a
document with a secretary of state or
any similar office under the law of a
State or Indian tribe.
(ii) The term ‘‘foreign reporting
company’’ means any entity that is:
(A) A corporation, limited liability
company, or other entity;
(B) Formed under the law of a foreign
country; and
(C) Registered to do business in any
State or tribal jurisdiction by the filing
of a document with a secretary of state
or any similar office under the law of a
State or Indian tribe.
(2) Exemptions. Notwithstanding
paragraph (c)(1) of this section, the term
‘‘reporting company’’ does not include:
(i) Securities reporting issuer. Any
issuer of securities that is:
(A) An issuer of a class of securities
registered under section 12 of the
Securities Exchange Act of 1934 (15
U.S.C. 78l); or
(B) Required to file supplementary
and periodic information under section
15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(d)).
(ii) Governmental authority. Any
entity that:
(A) Is established under the laws of
the United States, an Indian tribe, a
State, or a political subdivision of a
State, or under an interstate compact
between two or more States; and
(B) Exercises governmental authority
on behalf of the United States or any
such Indian tribe, State, or political
subdivision.
(iii) Bank. Any bank, as defined in:
(A) Section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813);
(B) Section 2(a) of the Investment
Company Act of 1940 (15 U.S.C. 80a–
2(a)); or
(C) Section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–
2(a)).
(iv) Credit union. Any Federal credit
union or State credit union, as those
terms are defined in section 101 of the
Federal Credit Union Act (12 U.S.C.
1752).
(v) Depository institution holding
company. Any bank holding company
as defined in section 2 of the Bank
Holding Company Act of 1956 (12
U.S.C. 1841), or any savings and loan
holding company as defined in section
10(a) of the Home Owners’ Loan Act (12
U.S.C. 1467a(a)).
(vi) Money services business. Any
money transmitting business registered
with FinCEN under 31 U.S.C. 5330, and
any money services business registered
with FinCEN under 31 CFR 1022.380.
(vii) Broker or dealer in securities.
Any broker or dealer, as those terms are
defined in section 3 of the Securities
Exchange Act of 1934 (15 U.S.C. 78c),
that is registered under section 15 of
that Act (15 U.S.C. 78o).
(viii) Securities exchange or clearing
agency. Any exchange or clearing
agency, as those terms are defined in
section 3 of the Securities Exchange Act
of 1934 (15 U.S.C. 78c), that is registered
under sections 6 or 17A of that Act (15
U.S.C. 78f, 78q–1).
(ix) Other Exchange Act registered
entity. Any other entity not described in
paragraph (c)(2)(i), (vii), or (viii) of this
section that is registered with the
Securities and Exchange Commission
under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.).
(x) Investment company or investment
adviser. Any entity that is:
(A) An investment company as
defined in section 3 of the Investment
Company Act of 1940 (15 U.S.C. 80a–3),
or is an investment adviser as defined
in section 202 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–2);
and
(B) Registered with the Securities and
Exchange Commission under the
Investment Company Act of 1940 (15
U.S.C. 80a–1 et seq.) or the Investment
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Advisers Act of 1940 (15 U.S.C. 80b–1
et seq.).
(xi) Venture capital fund adviser. Any
investment adviser that:
(A) Is described in section 203(l) of
the Investment Advisers Act of 1940 (15
U.S.C. 80b–3(l)); and
(B) Has filed Item 10, Schedule A, and
Schedule B of Part 1A of Form ADV, or
any successor thereto, with the
Securities and Exchange Commission.
(xii) Insurance company. Any
insurance company as defined in
section 2 of the Investment Company
Act of 1940 (15 U.S.C. 80a–2).
(xiii) State-licensed insurance
producer. Any entity that:
(A) Is an insurance producer that is
authorized by a State and subject to
supervision by the insurance
commissioner or a similar official or
agency of a State; and
(B) Has an operating presence at a
physical office within the United States.
(xiv) Commodity Exchange Act
registered entity. Any entity that:
(A) Is a registered entity as defined in
section 1a of the Commodity Exchange
Act (7 U.S.C. 1a); or
(B) Is:
(1) A futures commission merchant,
introducing broker, swap dealer, major
swap participant, commodity pool
operator, or commodity trading advisor,
each as defined in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a),
or a retail foreign exchange dealer as
described in section 2(c)(2)(B) of the
Commodity Exchange Act (7 U.S.C.
2(c)(2)(B); and
(2) Registered with the Commodity
Futures Trading Commission under the
Commodity Exchange Act.
(xv) Accounting firm. Any public
accounting firm registered in
accordance with section 102 of the
Sarbanes-Oxley Act of 2002 (15 U.S.C.
7212).
(xvi) Public utility. Any entity that is
a regulated public utility as defined in
26 U.S.C. 7701(a)(33)(A) that provides
telecommunications services, electrical
power, natural gas, or water and sewer
services within the United States.
(xvii) Financial market utility. Any
financial market utility designated by
the Financial Stability Oversight
Council under section 804 of the
Payment, Clearing, and Settlement
Supervision Act of 2010 (12 U.S.C.
5463).
(xviii) Pooled investment vehicle. Any
pooled investment vehicle that is
operated or advised by a person
described in paragraph (c)(2)(iii), (iv),
(vii), (x), or (xi) of this section.
(xix) Tax-exempt entity. Any entity
that is:
(A) An organization that is described
in section 501(c) of the Internal Revenue
Code of 1986 (Code) (determined
without regard to section 508(a) of the
Code) and exempt from tax under
section 501(a) of the Code, except that
in the case of any such organization that
ceases to be described in section 501(c)
and exempt from tax under section
501(a), such organization shall be
considered to continue to be described
in this paragraph (c)(1)(xix)(A) for the
180-day period beginning on the date of
the loss of such tax-exempt status;
(B) A political organization, as
defined in section 527(e)(1) of the Code,
that is exempt from tax under section
527(a) of the Code; or
(C) A trust described in paragraph (1)
or (2) of section 4947(a) of the Code.
(xx) Entity assisting a tax-exempt
entity. Any entity that:
(A) Operates exclusively to provide
financial assistance to, or hold
governance rights over, any entity
described in paragraph (c)(2)(xix) of this
section;
(B) Is a United States person;
(C) Is beneficially owned or controlled
exclusively by one or more United
States persons that are United States
citizens or lawfully admitted for
permanent residence; and
(D) Derives at least a majority of its
funding or revenue from one or more
United States persons that are United
States citizens or lawfully admitted for
permanent residence.
(xxi) Large operating company. Any
entity that:
(A) Employs more than 20 full time
employees in the United States, with
‘‘full time employee in the United
States’’ having the meaning provided in
26 CFR 54.4980H–1(a) and 54.4980H–3,
except that the term ‘‘United States’’ as
used in 26 CFR 54.4980H–1(a) and
54.4980H–3 has the meaning provided
in § 1010.100(hhh);
(B) Has an operating presence at a
physical office within the United States;
and
(C) Filed a Federal income tax or
information return in the United States
for the previous year demonstrating
more than $5,000,000 in gross receipts
or sales, as reported as gross receipts or
sales (net of returns and allowances) on
the entity’s IRS Form 1120, consolidated
IRS Form 1120, IRS Form 1120–S, IRS
Form 1065, or other applicable IRS
form, excluding gross receipts or sales
from sources outside the United States,
as determined under Federal income tax
principles. For an entity that is part of
an affiliated group of corporations
within the meaning of 26 U.S.C. 1504
that filed a consolidated return, the
applicable amount shall be the amount
reported on the consolidated return for
such group.
(xxii) Subsidiary of certain exempt
entities. Any entity whose ownership
interests are controlled or wholly
owned, directly or indirectly, by one or
more entities described in paragraphs
(c)(2)(i), (ii), (iii), (iv), (v), (vii), (viii),
(ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi),
(xvii), (xix), or (xxi) of this section.
(xxiii) Inactive entity. Any entity that:
(A) Was in existence on or before
January 1, 2020;
(B) Is not engaged in active business;
(C) Is not owned by a foreign person,
whether directly or indirectly, wholly or
partially;
(D) Has not experienced any change
in ownership in the preceding twelve
month period;
(E) Has not sent or received any funds
in an amount greater than $1,000, either
directly or through any financial
account in which the entity or any
affiliate of the entity had an interest, in
the preceding twelve month period; and
(F) Does not otherwise hold any kind
or type of assets, whether in the United
States or abroad, including any
ownership interest in any corporation,
limited liability company, or other
similar entity.
(d) Beneficial owner. For purposes of
this section, the term ‘‘beneficial
owner,’’ with respect to a reporting
company, means any individual who,
directly or indirectly, either exercises
substantial control over such reporting
company or owns or controls at least 25
percent of the ownership interests of
such reporting company.
(1) Substantial control—(i) Definition
of substantial control. An individual
exercises substantial control over a
reporting company if the individual:
(A) Serves as a senior officer of the
reporting company;
(B) Has authority over the
appointment or removal of any senior
officer or a majority of the board of
directors (or similar body);
(C) Directs, determines, or has
substantial influence over important
decisions made by the reporting
company, including decisions
regarding:
(1) The nature, scope, and attributes
of the business of the reporting
company, including the sale, lease,
mortgage, or other transfer of any
principal assets of the reporting
company;
(2) The reorganization, dissolution, or
merger of the reporting company;
(3) Major expenditures or
investments, issuances of any equity,
incurrence of any significant debt, or
approval of the operating budget of the
reporting company;
(4) The selection or termination of
business lines or ventures, or geographic
focus, of the reporting company;
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(5) Compensation schemes and
incentive programs for senior officers;
(6) The entry into or termination, or
the fulfillment or non-fulfillment, of
significant contracts;
(7) Amendments of any substantial
governance documents of the reporting
company, including the articles of
incorporation or similar formation
documents, bylaws, and significant
policies or procedures; or
(D) Has any other form of substantial
control over the reporting company.
(ii) Direct or indirect exercise of
substantial control. An individual may
directly or indirectly, including as a
trustee of a trust or similar arrangement,
exercise substantial control over a
reporting company through:
(A) Board representation;
(B) Ownership or control of a majority
of the voting power or voting rights of
the reporting company;
(C) Rights associated with any
financing arrangement or interest in a
company;
(D) Control over one or more
intermediary entities that separately or
collectively exercise substantial control
over a reporting company;
(E) Arrangements or financial or
business relationships, whether formal
or informal, with other individuals or
entities acting as nominees; or
(F) any other contract, arrangement,
understanding, relationship, or
otherwise.
(2) Ownership Interests—(i) Definition
of ownership interest. The term
‘‘ownership interest’’ means:
(A) Any equity, stock, or similar
instrument; preorganization certificate
or subscription; or transferable share of,
or voting trust certificate or certificate of
deposit for, an equity security, interest
in a joint venture, or certificate of
interest in a business trust; in each such
case, without regard to whether any
such instrument is transferable, is
classified as stock or anything similar,
or confers voting power or voting rights;
(B) Any capital or profit interest in an
entity;
(C) Any instrument convertible, with
or without consideration, into any share
or instrument described in paragraph
(d)(2)(i)(A), or (B) of this section, any
future on any such instrument, or any
warrant or right to purchase, sell, or
subscribe to a share or interest described
in paragraph (d)(2)(i)(A), or (B) of this
section, regardless of whether
characterized as debt;
(D) Any put, call, straddle, or other
option or privilege of buying or selling
any of the items described in paragraph
(d)(2)(i)(A), (B), or (C) of this section
without being bound to do so, except to
the extent that such option or privilege
is created and held by a third party or
third parties without the knowledge or
involvement of the reporting company;
or
(E) Any other instrument, contract,
arrangement, understanding,
relationship, or mechanism used to
establish ownership.
(ii) Ownership or control of ownership
interest. An individual may directly or
indirectly own or control an ownership
interest of a reporting company through
any contract, arrangement,
understanding, relationship, or
otherwise, including:
(A) Joint ownership with one or more
other persons of an undivided interest
in such ownership interest;
(B) Through another individual acting
as a nominee, intermediary, custodian,
or agent on behalf of such individual;
(C) With regard to a trust or similar
arrangement that holds such ownership
interest:
(1) As a trustee of the trust or other
individual (if any) with the authority to
dispose of trust assets;
(2) As a beneficiary who:
(i) Is the sole permissible recipient of
income and principal from the trust; or
(ii) Has the right to demand a
distribution of or withdraw
substantially all of the assets from the
trust; or
(3) As a grantor or settlor who has the
right to revoke the trust or otherwise
withdraw the assets of the trust; or
(D) Through ownership or control of
one or more intermediary entities, or
ownership or control of the ownership
interests of any such entities, that
separately or collectively own or control
ownership interests of the reporting
company.
(iii) Calculation of the total ownership
interests of a reporting company. In
determining whether an individual
owns or controls at least 25 percent of
the ownership interests of a reporting
company, the total ownership interests
that an individual owns or controls,
directly or indirectly, shall be calculated
as a percentage of the total outstanding
ownership interests of the reporting
company as follows:
(A) Ownership interests of the
individual shall be calculated at the
present time, and any options or similar
interests of the individual shall be
treated as exercised;
(B) For reporting companies that issue
capital or profit interests (including
entities treated as partnerships for
federal income tax purposes), the
individual’s ownership interests are the
individual’s capital and profit interests
in the entity, calculated as a percentage
of the total outstanding capital and
profit interests of the entity;
(C) For corporations, entities treated
as corporations for federal income tax
purposes, and other reporting
companies that issue shares of stock, the
applicable percentage shall be the
greater of:
(1) the total combined voting power of
all classes of ownership interests of the
individual as a percentage of total
outstanding voting power of all classes
of ownership interests entitled to vote,
or
(2) the total combined value of the
ownership interests of the individual as
a percentage of the total outstanding
value of all classes of ownership
interests; and
(D) If the facts and circumstances do
not permit the calculations described in
either paragraph (d)(2)(iii)(B) or (C) to be
performed with reasonable certainty,
any individual who owns or controls 25
percent or more of any class or type of
ownership interest of a reporting
company shall be deemed to own or
control 25 percent or more of the
ownership interests of the reporting
company.
(3) Exceptions. Notwithstanding any
other provision of this paragraph (d), the
term ‘‘beneficial owner’’ does not
include:
(i) A minor child, as defined under
the law of the State or Indian tribe in
which a domestic reporting company is
created or a foreign reporting company
is first registered, provided the reporting
company reports the required
information of a parent or legal guardian
of the minor child as specified in
paragraph (b)(2)(ii) of this section;
(ii) An individual acting as a
nominee, intermediary, custodian, or
agent on behalf of another individual;
(iii) An employee of a reporting
company, acting solely as an employee,
whose substantial control over or
economic benefits from such entity are
derived solely from the employment
status of the employee, provided that
such person is not a senior officer as
defined in paragraph (f)(8) of this
section;
(iv) An individual whose only interest
in a reporting company is a future
interest through a right of inheritance;
(v) A creditor of a reporting company.
For purposes of this paragraph (d)(3)(v),
a creditor is an individual who meets
the requirements of paragraph (d) of this
section solely through rights or interests
for the payment of a predetermined sum
of money, such as a debt incurred by the
reporting company, or a loan covenant
or other similar right associated with
such right to receive payment that is
intended to secure the right to receive
payment or enhance the likelihood of
repayment.
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(e) Company applicant. For purposes
of this section, the term ‘‘company
applicant’’ means:
(1) For a domestic reporting company,
the individual who directly files the
document that creates the domestic
reporting company as described in
paragraph (c)(1)(i) of this section;
(2) For a foreign reporting company,
the individual who directly files the
document that first registers the foreign
reporting company as described in
paragraph (c)(1)(ii) of this section; and
(3) Whether for a domestic or a
foreign reporting company, the
individual who is primarily responsible
for directing or controlling such filing if
more than one individual is involved in
the filing of the document.
(f) Definitions. For purposes of this
section, the following terms have the
following meanings.
(1) Employee. The term ‘‘employee’’
has the meaning given the term in 26
CFR 54.4980H–1(a)(15).
(2) FinCEN identifier. The term
‘‘FinCEN identifier’’ means the unique
identifying number assigned by FinCEN
to an individual or reporting company
under this section.
(3) Foreign person. The term ‘‘foreign
person’’ means a person who is not a
United States person.
(4) Indian tribe. The term ‘‘Indian
tribe’’ has the meaning given the term
‘‘Indian tribe’’ in section 102 of the
Federally Recognized Indian Tribe List
Act of 1994 (25 U.S.C. 5130).
(5) Lawfully admitted for permanent
residence. The term ‘‘lawfully admitted
for permanent residence’’ has the
meaning given the term in section
101(a) of the Immigration and
Nationality Act (8 U.S.C. 1101(a)).
(6) Operating presence at a physical
office within the United States. The term
‘‘has an operating presence at a physical
office within the United States’’ means
that an entity regularly conducts its
business at a physical location in the
United States that the entity owns or
leases and that is physically distinct
from the place of business of any other
unaffiliated entity.
(7) Pooled investment vehicle. The
term ‘‘pooled investment vehicle’’
means:
(i) Any investment company, as
defined in section 3(a) of the Investment
Company Act of 1940 (15 U.S.C. 80a–
3(a)); or
(ii) Any company that:
(A) Would be an investment company
under that section but for the exclusion
provided from that definition by
paragraph (1) or (7) of section 3(c) of
that Act (15 U.S.C. 80a–3(c)); and
(B) Is identified by its legal name by
the applicable investment adviser in its
Form ADV (or successor form) filed
with the Securities and Exchange
Commission or will be so identified in
the next annual updating amendment to
Form ADV required to be filed by the
applicable investment adviser pursuant
to rule 204–1 under the Investment
Advisers Act of 1940 (17 CFR 275.204–
1).
(8) Senior officer. The term ‘‘senior
officer’’ means any individual holding
the position or exercising the authority
of a president, chief financial officer,
general counsel, chief executive officer,
chief operating officer, or any other
officer, regardless of official title, who
performs a similar function.
(9) State. The term ‘‘State’’ means any
state of the United States, the District of
Columbia, the Commonwealth of Puerto
Rico, the Commonwealth of the
Northern Mariana Islands, American
Samoa, Guam, the United States Virgin
Islands, and any other commonwealth,
territory, or possession of the United
States.
(10) United States person. The term
‘‘United States person’’ has the meaning
given the term in section 7701(a)(30) of
the Internal Revenue Code of 1986.
(g) Reporting violations. It shall be
unlawful for any person to willfully
provide, or attempt to provide, false or
fraudulent beneficial ownership
information, including a false or
fraudulent identifying photograph or
document, to FinCEN in accordance
with this section, or to willfully fail to
report complete or updated beneficial
ownership information to FinCEN in
accordance with this section. For
purposes of this paragraph (g):
(1) The term ‘‘person’’ includes any
individual, reporting company, or other
entity.
(2) The term ‘‘beneficial ownership
information’’ includes any information
provided to FinCEN under this section.
(3) A person provides or attempts to
provide beneficial ownership
information to FinCEN if such person
does so directly or indirectly, including
by providing such information to
another person for purposes of a report
or application under this section.
(4) A person fails to report complete
or updated beneficial ownership
information to FinCEN if, with respect
to an entity:
(i) such entity is required, pursuant to
title 31, United States Code, section
5336, or its implementing regulations, to
report information to FinCEN;
(ii) the reporting company fails to
report such information to FinCEN; and
(iii) such person either causes the
failure, or is a senior officer of the entity
at the time of the failure.
Himamauli Das,
Acting Director, Financial Crimes
Enforcement Network.
[FR Doc. 2022–21020 Filed 9–29–22; 8:45 am]
BILLING CODE P
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168
H. R. 6395—1217
TITLE LXIV—ESTABLISHING BENE-
FICIAL OWNERSHIP INFORMATION
REPORTING REQUIREMENTS
Sec. 6401. Short title.
Sec. 6402. Sense of Congress.
Sec. 6403. Beneficial ownership information reporting requirements.
SEC. 6401. SHORT TITLE.
This title may be cited as the ‘‘Corporate Transparency Act’’.
SEC. 6402. SENSE OF CONGRESS.
It is the sense of Congress that—
(1) more than 2,000,000 corporations and limited liability
companies are being formed under the laws of the States each
year;
(2) most or all States do not require information about
the beneficial owners of the corporations, limited liability
companies, or other similar entities formed under the laws
of the State;
(3) malign actors seek to conceal their ownership of corpora-
tions, limited liability companies, or other similar entities in
the United States to facilitate illicit activity, including money
laundering, the financing of terrorism, proliferation financing,
serious tax fraud, human and drug trafficking, counterfeiting,
piracy, securities fraud, financial fraud, and acts of foreign
corruption, harming the national security interests of the
United States and allies of the United States;
(4) money launderers and others involved in commercial
activity intentionally conduct transactions through corporate
structures in order to evade detection, and may layer such
structures, much like Russian nesting ‘‘Matryoshka’’ dolls,
across various secretive jurisdictions such that each time an
investigator obtains ownership records for a domestic or foreign
entity, the newly identified entity is yet another corporate
entity, necessitating a repeat of the same process;
(5) Federal legislation providing for the collection of bene-
ficial ownership information for corporations, limited liability
companies, or other similar entities formed under the laws
of the States is needed to—
(A) set a clear, Federal standard for incorporation prac-
tices;
(B) protect vital Unites States national security
interests;
(C) protect interstate and foreign commerce;
(D) better enable critical national security, intelligence,
and law enforcement efforts to counter money laundering,
the financing of terrorism, and other illicit activity; and
(E) bring the United States into compliance with inter-
national anti-money laundering and countering the
financing of terrorism standards;
(6) beneficial ownership information collected under the
amendments made by this title is sensitive information and
will be directly available only to authorized government authori-
ties, subject to effective safeguards and controls, to—
169
H. R. 6395—1218
(A) facilitate important national security, intelligence,
and law enforcement activities; and
(B) confirm beneficial ownership information provided
to financial institutions to facilitate the compliance of the
financial institutions with anti-money laundering, coun-
tering the financing of terrorism, and customer due dili-
gence requirements under applicable law;
(7) consistent with applicable law, the Secretary of the
Treasury shall—
(A) maintain the information described in paragraph
(1) in a secure, nonpublic database, using information secu-
rity methods and techniques that are appropriate to protect
nonclassified information systems at the highest security
level; and
(B) take all steps, including regular auditing, to ensure
that government authorities accessing beneficial ownership
information do so only for authorized purposes consistent
with this title; and
(8) in prescribing regulations to provide for the reporting
of beneficial ownership information, the Secretary shall, to
the greatest extent practicable consistent with the purposes
of this title—
(A) seek to minimize burdens on reporting companies
associated with the collection of beneficial ownership
information;
(B) provide clarity to reporting companies concerning
the identification of their beneficial owners; and
(C) collect information in a form and manner that
is reasonably designed to generate a database that is highly
useful to national security, intelligence, and law enforce-
ment agencies and Federal functional regulators.
SEC. 6403. BENEFICIAL OWNERSHIP INFORMATION REPORTING
REQUIREMENTS.
(a) I
N
G
ENERAL
.—Subchapter II of chapter 53 of title 31, United
States Code, as amended by sections 6306(a)(1), 6307(a), and
6313(a) of this division, is amended by adding at the end the
following:
‘‘§ 5336. Beneficial ownership information reporting require-
ments
‘‘(a) D
EFINITIONS
.—In this section:
‘‘(1) A
CCEPTABLE IDENTIFICATION DOCUMENT
.—The term
‘acceptable identification document’ means, with respect to an
individual—
‘‘(A) a nonexpired passport issued by the United States;
‘‘(B) a nonexpired identification document issued by
a State, local government, or Indian Tribe to the individual
acting for the purpose of identification of that individual;
‘‘(C) a nonexpired driver’s license issued by a State;
or
‘‘(D) if the individual does not have a document
described in subparagraph (A), (B), or (C), a nonexpired
passport issued by a foreign government.
‘‘(2) A
PPLICANT
.—The term ‘applicant’ means any individual
who—
170
H. R. 6395—1219
‘‘(A) files an application to form a corporation, limited
liability company, or other similar entity under the laws
of a State or Indian Tribe; or
‘‘(B) registers or files an application to register a cor-
poration, limited liability company, or other similar entity
formed under the laws of a foreign country to do business
in the United States by filing a document with the secretary
of state or similar office under the laws of a State or
Indian Tribe.
‘‘(3) B
ENEFICIAL OWNER
.—The term ‘beneficial owner’—
‘‘(A) means, with respect to an entity, an individual
who, directly or indirectly, through any contract, arrange-
ment, understanding, relationship, or otherwise—
‘‘(i) exercises substantial control over the entity;
or ‘‘(ii) owns or controls not less than 25 percent
of the ownership interests of the entity; and
‘‘(B) does not include—
‘‘(i) a minor child, as defined in the State in which
the entity is formed, if the information of the parent
or guardian of the minor child is reported in accordance
with this section;
‘‘(ii) an individual acting as a nominee, inter-
mediary, custodian, or agent on behalf of another indi-
vidual;
‘‘(iii) an individual acting solely as an employee
of a corporation, limited liability company, or other
similar entity and whose control over or economic bene-
fits from such entity is derived solely from the employ-
ment status of the person;
‘‘(iv) an individual whose only interest in a corpora-
tion, limited liability company, or other similar entity
is through a right of inheritance; or
‘‘(v) a creditor of a corporation, limited liability
company, or other similar entity, unless the creditor
meets the requirements of subparagraph (A).
‘‘(4) D
IRECTOR
.—The term ‘Director’ means the Director
of FinCEN.
‘‘(5) F
IN
CEN.—The term ‘FinCEN’ means the Financial
Crimes Enforcement Network of the Department of the
Treasury.
‘‘(6) F
IN
CEN
IDENTIFIER
.—The term ‘FinCEN identifier’
means the unique identifying number assigned by FinCEN
to a person under this section.
‘‘(7) F
OREIGN PERSON
.—The term ‘foreign person’ means
a person who is not a United States person, as defined in
section 7701(a) of the Internal Revenue Code of 1986.
‘‘(8) I
NDIAN TRIBE
.—The term ‘Indian Tribe’ has the
meaning given the term ‘Indian tribe’ in section 102 of the
Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C.
5130).
‘‘(9) L
AWFULLY ADMITTED FOR PERMANENT RESIDENCE
.—The
term ‘lawfully admitted for permanent residence’ has the
meaning given the term in section 101(a) of the Immigration
and Nationality Act (8 U.S.C. 1101(a)).
‘‘(10) P
OOLED INVESTMENT VEHICLE
.—The term ‘pooled
investment vehicle’ means—
171
H. R. 6395—1220
‘‘(A) any investment company, as defined in section
3(a) of the Investment Company Act of 1940 (15 U.S.C.
80a–3(a)); or
‘‘(B) any company that—
‘‘(i) would be an investment company under that
section but for the exclusion provided from that defini-
tion by paragraph (1) or (7) of section 3(c) of that
Act (15 U.S.C. 80a–3(c)); and
‘‘(ii) is identified by its legal name by the applicable
investment adviser in its Form ADV (or successor form)
filed with the Securities and Exchange Commission.
‘‘(11) R
EPORTING COMPANY
.—The term ‘reporting com-
pany’— ‘‘(A) means a corporation, limited liability company,
or other similar entity that is—
‘‘(i) created by the filing of a document with a
secretary of state or a similar office under the law
of a State or Indian Tribe; or
‘‘(ii) formed under the law of a foreign country
and registered to do business in the United States
by the filing of a document with a secretary of state
or a similar office under the laws of a State or Indian
Tribe; and
‘‘(B) does not include—
‘‘(i) an issuer—
‘‘(I) of a class of securities registered under
section 12 of the Securities Exchange Act of 1934
(15 U.S.C. 78l); or
‘‘(II) that is required to file supplementary
and periodic information under section 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C.
78o(d));
‘‘(ii) an entity—
‘‘(I) established under the laws of the United
States, an Indian Tribe, a State, or a political
subdivision of a State, or under an interstate com-
pact between 2 or more States; and
‘‘(II) that exercises governmental authority on
behalf of the United States or any such Indian
Tribe, State, or political subdivision;
‘‘(iii) a bank, as defined in—
‘‘(I) section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813);
‘‘(II) section 2(a) of the Investment Company
Act of 1940 (15 U.S.C. 80a–2(a)); or
‘‘(III) section 202(a) of the Investment Advisers
Act of 1940 (15 U.S.C. 80b–2(a));
‘‘(iv) a Federal credit union or a State credit union
(as those terms are defined in section 101 of the Fed-
eral Credit Union Act (12 U.S.C. 1752));
‘‘(v) a bank holding company (as defined in section
2 of the Bank Holding Company Act of 1956 (12 U.S.C.
1841)) or a savings and loan holding company (as
defined in section 10(a) of the Home Owners’ Loan
Act (12 U.S.C. 1467a(a)));
‘‘(vi) a money transmitting business registered
with the Secretary of the Treasury under section 5330;
172
H. R. 6395—1221
‘‘(vii) a broker or dealer (as those terms are defined
in section 3 of the Securities Exchange Act of 1934
(15 U.S.C. 78c)) that is registered under section 15
of that Act (15 U.S.C. 78o);
‘‘(viii) an exchange or clearing agency (as those
terms are defined in section 3 of the Securities
Exchange Act of 1934 (15 U.S.C. 78c)) that is registered
under section 6 or 17A of that Act (15 U.S.C. 78f,
78q–1);
‘‘(ix) any other entity not described in clause (i),
(vii), or (viii) that is registered with the Securities
and Exchange Commission under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.);
‘‘(x) an entity that—
‘‘(I) is an investment company (as defined in
section 3 of the Investment Company Act of 1940
(15 U.S.C. 80a–3)) or an investment adviser (as
defined in section 202 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b–2)); and
‘‘(II) is registered with the Securities and
Exchange Commission under the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–1 et seq.) or
the Investment Advisers Act of 1940 (15 U.S.C.
80b–1 et seq.);
‘‘(xi) an investment adviser—
‘‘(I) described in section 203(l) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b–3(l));
and
‘‘(II) that has filed Item 10, Schedule A, and
Schedule B of Part 1A of Form ADV, or any suc-
cessor thereto, with the Securities and Exchange
Commission;
‘‘(xii) an insurance company (as defined in section
2 of the Investment Company Act of 1940 (15 U.S.C.
80a–2));
‘‘(xiii) an entity that—
‘‘(I) is an insurance producer that is authorized
by a State and subject to supervision by the insur-
ance commissioner or a similar official or agency
of a State; and
‘‘(II) has an operating presence at a physical
office within the United States;
‘‘(xiv)(I) a registered entity (as defined in section
1a of the Commodity Exchange Act (7 U.S.C. 1a));
or
‘‘(II) an entity that is—
‘‘(aa)(AA) a futures commission merchant,
introducing broker, swap dealer, major swap
participant, commodity pool operator, or com-
modity trading advisor (as those terms are defined
in section 1a of the Commodity Exchange Act (7
U.S.C. 1a)); or
‘‘(BB) a retail foreign exchange dealer, as
described in section 2(c)(2)(B) of that Act (7 U.S.C.
2(c)(2)(B)); and
173
H. R. 6395—1222
‘‘(bb) registered with the Commodity Futures
Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.);
‘‘(xv) a public accounting firm registered in accord-
ance with section 102 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7212);
‘‘(xvi) a public utility that provides telecommuni-
cations services, electrical power, natural gas, or water
and sewer services within the United States;
‘‘(xvii) a financial market utility designated by the
Financial Stability Oversight Council under section 804
of the Payment, Clearing, and Settlement Supervision
Act of 2010 (12 U.S.C. 5463);
‘‘(xviii) any pooled investment vehicle that is oper-
ated or advised by a person described in clause (iii),
(iv), (vii), (x), or (xi);
‘‘(xix) any—
‘‘(I) organization that is described in section
501(c) of the Internal Revenue Code of 1986 (deter-
mined without regard to section 508(a) of such
Code) and exempt from tax under section 501(a)
of such Code, except that in the case of any such
organization that loses an exemption from tax,
such organization shall be considered to be contin-
ued to be described in this subclause for the 180-
day period beginning on the date of the loss of
such tax-exempt status;
‘‘(II) political organization (as defined in sec-
tion 527(e)(1) of such Code) that is exempt from
tax under section 527(a) of such Code; or
‘‘(III) trust described in paragraph (1) or (2)
of section 4947(a) of such Code;
‘‘(xx) any corporation, limited liability company,
or other similar entity that—
‘‘(I) operates exclusively to provide financial
assistance to, or hold governance rights over, any
entity described in clause (xix);
‘‘(II) is a United States person;
‘‘(III) is beneficially owned or controlled exclu-
sively by 1 or more United States persons that
are United States citizens or lawfully admitted
for permanent residence; and
‘‘(IV) derives at least a majority of its funding
or revenue from 1 or more United States persons
that are United States citizens or lawfully
admitted for permanent residence;
‘‘(xxi) any entity that—
‘‘(I) employs more than 20 employees on a
full-time basis in the United States;
‘‘(II) filed in the previous year Federal income
tax returns in the United States demonstrating
more than $5,000,000 in gross receipts or sales
in the aggregate, including the receipts or sales
of— ‘‘(aa) other entities owned by the entity;
and
174
H. R. 6395—1223
‘‘(bb) other entities through which the
entity operates; and
‘‘(III) has an operating presence at a physical
office within the United States;
‘‘(xxii) any corporation, limited liability company,
or other similar entity of which the ownership interests
are owned or controlled, directly or indirectly, by 1
or more entities described in clause (i), (ii), (iii), (iv),
(v), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv),
(xvi), (xvii) (xix), or (xxi);
‘‘(xxiii) any corporation, limited liability company,
or other similar entity—
‘‘(I) in existence for over 1 year;
‘‘(II) that is not engaged in active business;
‘‘(III) that is not owned, directly or indirectly,
by a foreign person;
‘‘(IV) that has not, in the preceding 12-month
period, experienced a change in ownership or sent
or received funds in an amount greater than $1,000
(including all funds sent to or received from any
source through a financial account or accounts in
which the entity, or an affiliate of the entity, main-
tains an interest); and
‘‘(V) that does not otherwise hold any kind
or type of assets, including an ownership interest
in any corporation, limited liability company, or
other similar entity;
‘‘(xxiv) any entity or class of entities that the Sec-
retary of the Treasury, with the written concurrence
of the Attorney General and the Secretary of Homeland
Security, has, by regulation, determined should be
exempt from the requirements of subsection (b) because
requiring beneficial ownership information from the
entity or class of entities—
‘‘(I) would not serve the public interest; and
‘‘(II) would not be highly useful in national
security, intelligence, and law enforcement agency
efforts to detect, prevent, or prosecute money laun-
dering, the financing of terrorism, proliferation
finance, serious tax fraud, or other crimes.
‘‘(12) S
TATE
.—The term ‘State’ means any State of the
United States, the District of Columbia, the Commonwealth
of Puerto Rico, the Commonwealth of the Northern Mariana
Islands, American Samoa, Guam, the United States Virgin
Islands, and any other commonwealth, territory, or possession
of the United States.
‘‘(13) U
NIQUE IDENTIFYING NUMBER
.—The term ‘unique
identifying number’ means, with respect to an individual or
an entity with a sole member, the unique identifying number
from an acceptable identification document.
‘‘(14) U
NITED STATES PERSON
.—The term ‘United States
person’ has the meaning given the term in section 7701(a)
of the Internal Revenue Code of 1986.
‘‘(b) B
ENEFICIAL
O
WNERSHIP
I
NFORMATION
R
EPORTING
.—
‘‘(1) R
EPORTING
.—
‘‘(A) I
N GENERAL
.—In accordance with regulations pre-
scribed by the Secretary of the Treasury, each reporting
175
H. R. 6395—1224
company shall submit to FinCEN a report that contains
the information described in paragraph (2).
‘‘(B) R
EPORTING OF EXISTING ENTITIES
.—In accordance
with regulations prescribed by the Secretary of the
Treasury, any reporting company that has been formed
or registered before the effective date of the regulations
prescribed under this subsection shall, in a timely manner,
and not later than 2 years after the effective date of the
regulations prescribed under this subsection, submit to
FinCEN a report that contains the information described
in paragraph (2).
‘‘(C) R
EPORTING AT TIME OF FORMATION OR REGISTRA
-
TION
.—In accordance with regulations prescribed by the
Secretary of the Treasury, any reporting company that
has been formed or registered after the effective date of
the regulations promulgated under this subsection shall,
at the time of formation or registration, submit to FinCEN
a report that contains the information described in para-
graph (2).
‘‘(D) U
PDATED REPORTING FOR CHANGES IN BENEFICIAL
OWNERSHIP
.—In accordance with regulations prescribed by
the Secretary of the Treasury, a reporting company shall,
in a timely manner, and not later than 1 year after the
date on which there is a change with respect to any
information described in paragraph (2), submit to FinCEN
a report that updates the information relating to the
change.
‘‘(E) T
REASURY REVIEW OF UPDATED REPORTING FOR
CHANGES IN BENEFICIAL OWNERSHIP
.—The Secretary of the
Treasury, in consultation with the Attorney General and
the Secretary of Homeland Security, shall conduct a review
to evaluate—
‘‘(i) the necessity of a requirement for corporations,
limited liability companies, or other similar entities
to update the report on beneficial ownership informa-
tion in paragraph (2), related to a change in ownership,
within a shorter period of time than required under
subparagraph (D), taking into account the updating
requirements under subparagraph (D) and the informa-
tion contained in the reports;
‘‘(ii) the benefit to law enforcement and national
security officials that might be derived from, and the
burden that a requirement to update the list of bene-
ficial owners within a shorter period of time after
a change in the list of beneficial owners would impose
on corporations, limited liability companies, or other
similar entities; and
‘‘(iii) not later than 2 years after the date of enact-
ment of this section, incorporate into the regulations,
as appropriate, any changes necessary to implement
the findings and determinations based on the review
required under this subparagraph.
‘‘(F) R
EGULATION REQUIREMENTS
.—In promulgating the
regulations required under subparagraphs (A) through (D),
the Secretary of the Treasury shall, to the greatest extent
practicable—
176
H. R. 6395—1225
‘‘(i) establish partnerships with State, local, and
Tribal governmental agencies;
‘‘(ii) collect information described in paragraph (2)
through existing Federal, State, and local processes
and procedures;
‘‘(iii) minimize burdens on reporting companies
associated with the collection of the information
described in paragraph (2), in light of the private
compliance costs placed on legitimate businesses,
including by identifying any steps taken to mitigate
the costs relating to compliance with the collection
of information; and
‘‘(iv) collect information described in paragraph (2)
in a form and manner that ensures the information
is highly useful in—
‘‘(I) facilitating important national security,
intelligence, and law enforcement activities; and
‘‘(II) confirming beneficial ownership informa-
tion provided to financial institutions to facilitate
the compliance of the financial institutions with
anti-money laundering, countering the financing
of terrorism, and customer due diligence require-
ments under applicable law.
‘‘(G) R
EGULATORY SIMPLIFICATION
.—To simplify compli-
ance with this section for reporting companies and financial
institutions, the Secretary of the Treasury shall ensure
that the regulations prescribed by the Secretary under
this subsection are added to part 1010 of title 31, Code
of Federal Regulations, or any successor thereto.
‘‘(2) R
EQUIRED INFORMATION
.—
‘‘(A) I
N GENERAL
.—In accordance with regulations pre-
scribed by the Secretary of the Treasury, a report delivered
under paragraph (1) shall, except as provided in subpara-
graph (B), identify each beneficial owner of the applicable
reporting company and each applicant with respect to that
reporting company by—
‘‘(i) full legal name;
‘‘(ii) date of birth;
‘‘(iii) current, as of the date on which the report
is delivered, residential or business street address; and
‘‘(iv)(I) unique identifying number from an accept-
able identification document; or
‘‘(II) FinCEN identifier in accordance with require-
ments in paragraph (3).
‘‘(B) R
EPORTING REQUIREMENT FOR EXEMPT ENTITIES
HAVING AN OWNERSHIP INTEREST
.—If an exempt entity
described in subsection (a)(11)(B) has or will have a direct
or indirect ownership interest in a reporting company, the
reporting company or the applicant—
‘‘(i) shall, with respect to the exempt entity, only
list the name of the exempt entity; and
‘‘(ii) shall not be required to report the information
with respect to the exempt entity otherwise required
under subparagraph (A).
‘‘(C) R
EPORTING REQUIREMENT FOR CERTAIN POOLED
INVESTMENT VEHICLES
.—Any corporation, limited liability
company, or other similar entity that is an exempt entity
177
H. R. 6395—1226
described in subsection (a)(11)(B)(xviii) and is formed under
the laws of a foreign country shall file with FinCEN a
written certification that provides identification informa-
tion of an individual that exercises substantial control over
the pooled investment vehicle in the same manner as
required under this subsection.
‘‘(D) R
EPORTING REQUIREMENT FOR EXEMPT SUBSIDI
-
ARIES
.—In accordance with the regulations promulgated
by the Secretary, any corporation, limited liability company,
or other similar entity that is an exempt entity described
in subsection (a)(11)(B)(xxii), shall, at the time such entity
no longer meets the criteria described in subsection
(a)(11)(B)(xxii), submit to FinCEN a report containing the
information required under subparagraph (A).
‘‘(E) R
EPORTING REQUIREMENT FOR EXEMPT GRAND
-
FATHERED ENTITIES
.—In accordance with the regulations
promulgated by the Secretary, any corporation, limited
liability company, or other similar entity that is an exempt
entity described in subsection (a)(11)(B)(xxiii), shall, at the
time such entity no longer meets the criteria described
in subsection (a)(11)(B)(xxiii), submit to FinCEN a report
containing the information required under subparagraph
(A).
‘‘(3) F
IN
CEN
IDENTIFIER
.—
‘‘(A) I
SSUANCE OF FINCEN IDENTIFIER
.—
‘‘(i) I
N GENERAL
.—Upon request by an individual
who has provided FinCEN with the information
described in paragraph (2)(A) pertaining to the indi-
vidual, or by an entity that has reported its beneficial
ownership information to FinCEN in accordance with
this section, FinCEN shall issue a FinCEN identifier
to such individual or entity.
‘‘(ii) U
PDATING OF INFORMATION
.—An individual or
entity with a FinCEN identifier shall submit filings
with FinCEN pursuant to paragraph (1) updating any
information described in paragraph (2) in a timely
manner consistent with paragraph (1)(D).
‘‘(iii) E
XCLUSIVE IDENTIFIER
.—FinCEN shall not
issue more than 1 FinCEN identifier to the same indi-
vidual or to the same entity (including any successor
entity).
‘‘(B) U
SE OF FINCEN IDENTIFIER FOR INDIVIDUALS
.—
Any person required to report the information described
in paragraph (2) with respect to an individual may instead
report the FinCEN identifier of the individual.
‘‘(C) U
SE OF FINCEN IDENTIFIER FOR ENTITIES
.—If an
individual is or may be a beneficial owner of a reporting
company by an interest held by the individual in an entity
that, directly or indirectly, holds an interest in the
reporting company, the reporting company may report the
FinCEN identifier of the entity in lieu of providing the
information required by paragraph (2)(A) with respect to
the individual.
‘‘(4) R
EGULATIONS
.—The Secretary of the Treasury shall—
‘‘(A) by regulation prescribe procedures and standards
governing any report under paragraph (2) and any FinCEN
identifier under paragraph (3); and
178
H. R. 6395—1227
‘‘(B) in promulgating the regulations under subpara-
graph (A) to the extent practicable, consistent with the
purposes of this section—
‘‘(i) minimize burdens on reporting companies asso-
ciated with the collection of beneficial ownership
information, including by eliminating duplicative
requirements; and
‘‘(ii) ensure the beneficial ownership information
reported to FinCEN is accurate, complete, and highly
useful.
‘‘(5) E
FFECTIVE DATE
.—The requirements of this subsection
shall take effect on the effective date of the regulations pre-
scribed by the Secretary of the Treasury under this subsection,
which shall be promulgated not later than 1 year after the
date of enactment of this section.
‘‘(6) R
EPORT
.—Not later than 1 year after the effective
date described in paragraph (5), and annually thereafter for
2 years, the Secretary of the Treasury shall submit to Congress
a report describing the procedures and standards prescribed
to carry out paragraph (2), which shall include an assessment
of—
‘‘(A) the effectiveness of those procedures and stand-
ards in minimizing reporting burdens (including through
the elimination of duplicative requirements) and strength-
ening the accuracy of reports submitted under paragraph
(2); and
‘‘(B) any alternative procedures and standards pre-
scribed to carry out paragraph (2).
‘‘(c) R
ETENTION AND
D
ISCLOSURE OF
B
ENEFICIAL
O
WNERSHIP
I
NFORMATION BY
F
IN
CEN.—
‘‘(1) R
ETENTION OF INFORMATION
.—Beneficial ownership
information required under subsection (b) relating to each
reporting company shall be maintained by FinCEN for not
fewer than 5 years after the date on which the reporting com-
pany terminates.
‘‘(2) D
ISCLOSURE
.—
‘‘(A) P
ROHIBITION
.—Except as authorized by this sub-
section and the protocols promulgated under this sub-
section, beneficial ownership information reported under
this section shall be confidential and may not be disclosed
by—
‘‘(i) an officer or employee of the United States;
‘‘(ii) an officer or employee of any State, local,
or Tribal agency; or
‘‘(iii) an officer or employee of any financial institu-
tion or regulatory agency receiving information under
this subsection.
‘‘(B) S
COPE OF DISCLOSURE BY FINCEN
.—FinCEN may
disclose beneficial ownership information reported pursu-
ant to this section only upon receipt of—
‘‘(i) a request, through appropriate protocols—
‘‘(I) from a Federal agency engaged in national
security, intelligence, or law enforcement activity,
for use in furtherance of such activity; or
‘‘(II) from a State, local, or Tribal law enforce-
ment agency, if a court of competent jurisdiction,
179
H. R. 6395—1228
including any officer of such a court, has author-
ized the law enforcement agency to seek the
information in a criminal or civil investigation;
‘‘(ii) a request from a Federal agency on behalf
of a law enforcement agency, prosecutor, or judge of
another country, including a foreign central authority
or competent authority (or like designation), under an
international treaty, agreement, convention, or official
request made by law enforcement, judicial, or prosecu-
torial authorities in trusted foreign countries when
no treaty, agreement, or convention is available—
‘‘(I) issued in response to a request for assist-
ance in an investigation or prosecution by such
foreign country; and
‘‘(II) that—
‘‘(aa) requires compliance with the disclo-
sure and use provisions of the treaty, agree-
ment, or convention, publicly disclosing any
beneficial ownership information received; or
‘‘(bb) limits the use of the information for
any purpose other than the authorized inves-
tigation or national security or intelligence
activity;
‘‘(iii) a request made by a financial institution sub-
ject to customer due diligence requirements, with the
consent of the reporting company, to facilitate the
compliance of the financial institution with customer
due diligence requirements under applicable law; or
‘‘(iv) a request made by a Federal functional regu-
lator or other appropriate regulatory agency consistent
with the requirements of subparagraph (C).
‘‘(C) F
ORM AND MANNER OF DISCLOSURE TO FINANCIAL
INSTITUTIONS AND REGULATORY AGENCIES
.—The Secretary
of the Treasury shall, by regulation, prescribe the form
and manner in which information shall be provided to
a financial institution under subparagraph (B)(iii), which
regulation shall include that the information shall also
be available to a Federal functional regulator or other
appropriate regulatory agency, as determined by the Sec-
retary, if the agency—
‘‘(i) is authorized by law to assess, supervise,
enforce, or otherwise determine the compliance of the
financial institution with the requirements described
in that subparagraph;
‘‘(ii) uses the information solely for the purpose
of conducting the assessment, supervision, or author-
ized investigation or activity described in clause (i);
and ‘‘(iii) enters into an agreement with the Secretary
providing for appropriate protocols governing the safe-
keeping of the information.
‘‘(3) A
PPROPRIATE PROTOCOLS
.—The Secretary of the
Treasury shall establish by regulation protocols described in
paragraph (2)(A) that—
‘‘(A) protect the security and confidentiality of any
beneficial ownership information provided directly by the
Secretary;
180
H. R. 6395—1229
‘‘(B) require the head of any requesting agency, on
a non-delegable basis, to approve the standards and proce-
dures utilized by the requesting agency and certify to the
Secretary semi-annually that such standards and proce-
dures are in compliance with the requirements of this
paragraph;
‘‘(C) require the requesting agency to establish and
maintain, to the satisfaction of the Secretary, a secure
system in which such beneficial ownership information pro-
vided directly by the Secretary shall be stored;
‘‘(D) require the requesting agency to furnish a report
to the Secretary, at such time and containing such informa-
tion as the Secretary may prescribe, that describes the
procedures established and utilized by such agency to
ensure the confidentiality of the beneficial ownership
information provided directly by the Secretary;
‘‘(E) require a written certification for each authorized
investigation or other activity described in paragraph (2)
from the head of an agency described in paragraph
(2)(B)(i)(I), or their designees, that—
‘‘(i) states that applicable requirements have been
met, in such form and manner as the Secretary may
prescribe; and
‘‘(ii) at a minimum, sets forth the specific reason
or reasons why the beneficial ownership information
is relevant to an authorized investigation or other
activity described in paragraph (2);
‘‘(F) require the requesting agency to limit, to the
greatest extent practicable, the scope of information sought,
consistent with the purposes for seeking beneficial owner-
ship information;
‘‘(G) restrict, to the satisfaction of the Secretary, access
to beneficial ownership information to whom disclosure
may be made under the provisions of this section to only
users at the requesting agency—
‘‘(i) who are directly engaged in the authorized
investigation or activity described in paragraph (2);
‘‘(ii) whose duties or responsibilities require such
access;
‘‘(iii) who—
‘‘(I) have undergone appropriate training; or
‘‘(II) use staff to access the database who have
undergone appropriate training;
‘‘(iv) who use appropriate identity verification
mechanisms to obtain access to the information; and
‘‘(v) who are authorized by agreement with the
Secretary to access the information;
‘‘(H) require the requesting agency to establish and
maintain, to the satisfaction of the Secretary, a permanent
system of standardized records with respect to an auditable
trail of each request for beneficial ownership information
submitted to the Secretary by the agency, including the
reason for the request, the name of the individual who
made the request, the date of the request, any disclosure
of beneficial ownership information made by or to the
agency, and any other information the Secretary of the
Treasury determines is appropriate;
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H. R. 6395—1230
‘‘(I) require that the requesting agency receiving bene-
ficial ownership information from the Secretary conduct
an annual audit to verify that the beneficial ownership
information received from the Secretary has been accessed
and used appropriately, and in a manner consistent with
this paragraph and provide the results of that audit to
the Secretary upon request;
‘‘(J) require the Secretary to conduct an annual audit
of the adherence of the agencies to the protocols established
under this paragraph to ensure that agencies are
requesting and using beneficial ownership information
appropriately; and
‘‘(K) provide such other safeguards which the Secretary
determines (and which the Secretary prescribes in regula-
tions) to be necessary or appropriate to protect the confiden-
tiality of the beneficial ownership information.
‘‘(4) V
IOLATION OF PROTOCOLS
.—Any employee or officer
of a requesting agency under paragraph (2)(B) that violates
the protocols described in paragraph (3), including unauthorized
disclosure or use, shall be subject to criminal and civil penalties
under subsection (h)(3)(B).
‘‘(5) D
EPARTMENT OF THE TREASURY ACCESS
.—
‘‘(A) I
N GENERAL
.—Beneficial ownership information
shall be accessible for inspection or disclosure to officers
and employees of the Department of the Treasury whose
official duties require such inspection or disclosure subject
to procedures and safeguards prescribed by the Secretary
of the Treasury.
‘‘(B) T
AX ADMINISTRATION PURPOSES
.—Officers and
employees of the Department of the Treasury may obtain
access to beneficial ownership information for tax adminis-
tration purposes in accordance with this subsection.
‘‘(6) R
EJECTION OF REQUEST
.—The Secretary of the
Treasury—
‘‘(A) shall reject a request not submitted in the form
and manner prescribed by the Secretary under paragraph
(2)(C); and
‘‘(B) may decline to provide information requested
under this subsection upon finding that—
‘‘(i) the requesting agency has failed to meet any
other requirement of this subsection;
‘‘(ii) the information is being requested for an
unlawful purpose; or
‘‘(iii) other good cause exists to deny the request.
‘‘(7) S
USPENSION
.—The Secretary of the Treasury may sus-
pend or debar a requesting agency from access for any of
the grounds set forth in paragraph (6), including for repeated
or serious violations of any requirement under paragraph (2).
‘‘(8) S
ECURITY PROTECTIONS
.—The Secretary of the
Treasury shall maintain information security protections,
including encryption, for information reported to FinCEN under
subsection (b) and ensure that the protections—
‘‘(A) are consistent with standards and guidelines
developed under subchapter II of chapter 35 of title 44;
and
182
H. R. 6395—1231
‘‘(B) incorporate Federal information system security
controls for high-impact systems, excluding national secu-
rity systems, consistent with applicable law to prevent
the loss of confidentiality, integrity, or availability of
information that may have a severe or catastrophic adverse
effect.
‘‘(9) R
EPORT BY THE SECRETARY
.—Not later than 1 year
after the effective date of the regulations prescribed under
this subsection, and annually thereafter for 5 years, the Sec-
retary of the Treasury shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representa-
tives a report, which—
‘‘(A) may include a classified annex; and
‘‘(B) shall, with respect to each request submitted
under paragraph (2)(B)(i)(II) during the period covered by
the report, and consistent with protocols established by
the Secretary that are necessary to protect law enforcement
sensitive, tax-related, or classified information, include—
‘‘(i) the date on which the request was submitted;
‘‘(ii) the source of the request;
‘‘(iii) whether the request was accepted or rejected
or is pending; and
‘‘(iv) a general description of the basis for rejecting
the such request, if applicable.
‘‘(10) A
UDIT BY THE COMPTROLLER GENERAL
.—Not later than
1 year after the effective date of the regulations prescribed
under this subsection, and annually thereafter for 6 years,
the Comptroller General of the United States shall—
‘‘(A) audit the procedures and safeguards established
by the Secretary of the Treasury under those regulations,
including duties for verification of requesting agencies sys-
tems and adherence to the protocols established under
this subsection, to determine whether such safeguards and
procedures meet the requirements of this subsection and
that the Department of the Treasury is using beneficial
ownership information appropriately in a manner con-
sistent with this subsection; and
‘‘(B) submit to the Secretary of the Treasury, the Com-
mittee on Banking, Housing, and Urban Affairs of the
Senate, and the Committee on Financial Services of the
House of Representatives a report that contains the
findings and determinations with respect to any audit con-
ducted under this paragraph.
‘‘(11) D
EPARTMENT OF THE TREASURY TESTIMONY
.—
‘‘(A) I
N GENERAL
.—Not later than March 31 of each
year for 5 years beginning in 2022, the Director shall
be made available to testify before the Committee on
Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Rep-
resentatives, or an appropriate subcommittee thereof,
regarding FinCEN issues, including, specifically, issues
relating to—
‘‘(i) anticipated plans, goals, and resources nec-
essary for operations of FinCEN in implementing the
requirements of the Anti-Money Laundering Act of
2020 and the amendments made by that Act;
183
H. R. 6395—1232
‘‘(ii) the adequacy of appropriations for FinCEN
in the current and the previous fiscal year to—
‘‘(I) ensure that the requirements and obliga-
tions imposed upon FinCEN by the Anti-Money
Laundering Act of 2020 and the amendments made
by that Act are completed as efficiently, effectively,
and expeditiously as possible; and
‘‘(II) provide for robust and effective
implementation and enforcement of the provisions
of the Anti-Money Laundering Act of 2020 and
the amendments made by that Act;
‘‘(iii) strengthen FinCEN management efforts, as
necessary and as identified by the Director, to meet
the requirements of the Anti-Money Laundering Act
of 2020 and the amendments made by that Act;
‘‘(iv) provide for the necessary public outreach to
ensure the broad dissemination of information
regarding any new program requirements provided for
in the Anti-Money Laundering Act of 2020 and the
amendments made by that Act, including—
‘‘(I) educating the business community on the
goals and operations of the new beneficial owner-
ship database; and
‘‘(II) disseminating to the governments of coun-
tries that are allies or partners of the United
States information on best practices developed by
FinCEN related to beneficial ownership informa-
tion retention and use;
‘‘(v) any policy recommendations that could facili-
tate and improve communication and coordination
between the private sector, FinCEN, and the Federal,
State, and local agencies and entities involved in imple-
menting innovative approaches to meet their obliga-
tions under the Anti-Money Laundering Act of 2020
and the amendments made by that Act, the Bank
Secrecy Act (as defined in section 6003 of the Anti-
Money Laundering Act of 2020), and other anti-money
laundering compliance laws; and
‘‘(vi) any other matter that the Director determines
is appropriate.
‘‘(B) T
ESTIMONY CLASSIFICATION
.—The testimony
required under subparagraph (A)—
‘‘(i) shall be submitted in unclassified form; and
‘‘(ii) may include a classified portion.
‘‘(d) A
GENCY
C
OORDINATION
.—
‘‘(1) I
N GENERAL
.—The Secretary of the Treasury shall,
to the greatest extent practicable, update the information
described in subsection (b) by working collaboratively with other
relevant Federal, State, and Tribal agencies.
‘‘(2) I
NFORMATION FROM RELEVANT FEDERAL
,
STATE
,
AND
TRIBAL AGENCIES
.—Relevant Federal, State, and Tribal agen-
cies, as determined by the Secretary of the Treasury, shall,
to the extent practicable, and consistent with applicable legal
protections, cooperate with and provide information requested
by FinCEN for purposes of maintaining an accurate, complete,
and highly useful database for beneficial ownership informa-
tion.
184
H. R. 6395—1233
‘‘(3) R
EGULATIONS
.—The Secretary of the Treasury, in con-
sultation with the heads of other relevant Federal agencies,
may promulgate regulations as necessary to carry out this
subsection.
‘‘(e) N
OTIFICATION OF
F
EDERAL
O
BLIGATIONS
.—
‘‘(1) F
EDERAL
.—The Secretary of the Treasury shall take
reasonable steps to provide notice to persons of their obligations
to report beneficial ownership information under this section,
including by causing appropriate informational materials
describing such obligations to be included in 1 or more forms
or other informational materials regularly distributed by the
Internal Revenue Service and FinCEN.
‘‘(2) S
TATES AND INDIAN TRIBES
.—
‘‘(A) I
N GENERAL
.—As a condition of the funds made
available under this section, each State and Indian Tribe
shall, not later than 2 years after the effective date of
the regulations promulgated under subsection (b)(4), take
the following actions:
‘‘(i) The secretary of a State or a similar office
in each State or Indian Tribe responsible for the forma-
tion or registration of entities created by the filing
of a public document with the office under the law
of the State or Indian Tribe shall periodically, including
at the time of any initial formation or registration
of an entity, assessment of an annual fee, or renewal
of any license to do business in the United States
and in connection with State or Indian Tribe corporate
tax assessments or renewals—
‘‘(I) notify filers of their requirements as
reporting companies under this section, including
the requirements to file and update reports under
paragraphs (1) and (2) of subsection (b); and
‘‘(II) provide the filers with a copy of the
reporting company form created by the Secretary
of the Treasury under this subsection or an inter-
net link to that form.
‘‘(ii) The secretary of a State or a similar office
in each State or Indian Tribe responsible for the forma-
tion or registration of entities created by the filing
of a public document with the office under the law
of the State or Indian Tribes shall update the websites,
forms relating to incorporation, and physical premises
of the office to notify filers of their requirements as
reporting companies under this section, including pro-
viding an internet link to the reporting company form
created by the Secretary of the Treasury under this
section.
‘‘(B) N
OTIFICATION FROM THE DEPARTMENT OF THE
TREASURY
.—A notification under clause (i) or (ii) of
subparagraph (A) shall explicitly state that the notification
is on behalf of the Department of the Treasury for the
purpose of preventing money laundering, the financing of
terrorism, proliferation financing, serious tax fraud, and
other financial crime by requiring nonpublic registration
of business entities formed or registered to do business
in the United States.
185
H. R. 6395—1234
‘‘(f) N
O
B
EARER
S
HARE
C
ORPORATIONS OR
L
IMITED
L
IABILITY
C
OMPANIES
.—A corporation, limited liability company, or other
similar entity formed under the laws of a State or Indian Tribe
may not issue a certificate in bearer form evidencing either a
whole or fractional interest in the entity.
‘‘(g) R
EGULATIONS
.—In promulgating regulations carrying out
this section, the Director shall reach out to members of the small
business community and other appropriate parties to ensure effi-
ciency and effectiveness of the process for the entities subject to
the requirements of this section.
‘‘(h) P
ENALTIES
.—
‘‘(1) R
EPORTING VIOLATIONS
.—It shall be unlawful for any
person to—
‘‘(A) willfully provide, or attempt to provide, false or
fraudulent beneficial ownership information, including a
false or fraudulent identifying photograph or document,
to FinCEN in accordance with subsection (b); or
‘‘(B) willfully fail to report complete or updated bene-
ficial ownership information to FinCEN in accordance with
subsection (b).
‘‘(2) U
NAUTHORIZED DISCLOSURE OR USE
.—Except as author-
ized by this section, it shall be unlawful for any person to
knowingly disclose or knowingly use the beneficial ownership
information obtained by the person through—
‘‘(A) a report submitted to FinCEN under subsection
(b); or
‘‘(B) a disclosure made by FinCEN under subsection
(c).
‘‘(3) C
RIMINAL AND CIVIL PENALTIES
.—
‘‘(A) R
EPORTING VIOLATIONS
.—Any person that violates
subparagraph (A) or (B) of paragraph (1)—
‘‘(i) shall be liable to the United States for a civil
penalty of not more than $500 for each day that the
violation continues or has not been remedied; and
‘‘(ii) may be fined not more than $10,000, impris-
oned for not more than 2 years, or both.
‘‘(B) U
NAUTHORIZED DISCLOSURE OR USE VIOLATIONS
.—
Any person that violates paragraph (2)—
‘‘(i) shall be liable to the United States for a civil
penalty of not more than $500 for each day that the
violation continues or has not been remedied; and
‘‘(ii)(I) shall be fined not more than $250,000, or
imprisoned for not more than 5 years, or both; or
‘‘(II) while violating another law of the United
States or as part of a pattern of any illegal activity
involving more than $100,000 in a 12-month period,
shall be fined not more than $500,000, imprisoned
for not more than 10 years, or both.
‘‘(C) S
AFE HARBOR
.—
‘‘(i) S
AFE HARBOR
.—
‘‘(I) I
N GENERAL
.—Except as provided in sub-
clause (II), a person shall not be subject to civil
or criminal penalty under subparagraph (A) if the
person—
‘‘(aa) has reason to believe that any report
submitted by the person in accordance with
186
H. R. 6395—1235
subsection (b) contains inaccurate information;
and
‘‘(bb) in accordance with regulations
issued by the Secretary, voluntarily and
promptly, and in no case later than 90 days
after the date on which the person submitted
the report, submits a report containing cor-
rected information.
‘‘(II) E
XCEPTIONS
.—A person shall not be
exempt from penalty under clause (i) if, at the
time the person submits the report required by
subsection (b), the person—
‘‘(aa) acts for the purpose of evading the
reporting requirements under subsection (b);
and
‘‘(bb) has actual knowledge that any
information contained in the report is inac-
curate.
‘‘(ii) A
SSISTANCE
.—FinCEN shall provide assist-
ance to any person seeking to submit a corrected report
in accordance with clause (i)(I).
‘‘(4) U
SER COMPLAINT PROCESS
.—
‘‘(A) I
N GENERAL
.—The Inspector General of the
Department of the Treasury, in coordination with the Sec-
retary of the Treasury, shall provide public contact informa-
tion to receive external comments or complaints regarding
the beneficial ownership information notification and collec-
tion process or regarding the accuracy, completeness, or
timeliness of such information.
‘‘(B) R
EPORT
.—The Inspector General of the Depart-
ment of the Treasury shall submit to Congress a periodic
report that—
‘‘(i) summarizes external comments or complaints
and related investigations conducted by the Inspector
General related to the collection of beneficial ownership
information; and
‘‘(ii) includes recommendations, in coordination
with FinCEN, to improve the form and manner of
the notification, collection and updating processes of
the beneficial ownership information reporting require-
ments to ensure the beneficial ownership information
reported to FinCEN is accurate, complete, and highly
useful.
‘‘(5) T
REASURY OFFICE OF INSPECTOR GENERAL INVESTIGA
-
TION IN THE EVENT OF A CYBERSECURITY BREACH
.—
‘‘(A) I
N GENERAL
.—In the event of a cybersecurity
breach that results in substantial unauthorized access and
disclosure of sensitive beneficial ownership information,
the Inspector General of the Department of the Treasury
shall conduct an investigation into FinCEN cybersecurity
practices that, to the extent possible, determines any
vulnerabilities within FinCEN information security and
confidentiality protocols and provides recommendations for
fixing those deficiencies.
‘‘(B) R
EPORT
.—The Inspector General of the Depart-
ment of the Treasury shall submit to the Secretary of
187
H. R. 6395—1236
the Treasury a report on each investigation conducted
under subparagraph (A).
‘‘(C) A
CTIONS OF THE SECRETARY
.—Upon receiving a
report submitted under subparagraph (B), the Secretary
of the Treasury shall—
‘‘(i) determine whether the Director had any
responsibility for the cybersecurity breach or whether
policies, practices, or procedures implemented at the
direction of the Director led to the cybersecurity breach;
and
‘‘(ii) submit to Congress a written report outlining
the findings of the Secretary, including a determination
by the Secretary on whether to retain or dismiss the
individual serving as the Director.
‘‘(6) D
EFINITION
.—In this subsection, the term ‘willfully’
means the voluntary, intentional violation of a known legal
duty.
‘‘(i) C
ONTINUOUS
R
EVIEW OF
E
XEMPT
E
NTITIES
.—
‘‘(1) I
N GENERAL
.—On and after the effective date of the
regulations promulgated under subsection (b)(4), if the Sec-
retary of the Treasury makes a determination, which may
be based on information contained in the report required under
section 6502(c) of the Anti-Money Laundering Act of 2020 or
on any other information available to the Secretary, that an
entity or class of entities described in subsection (a)(11)(B)
has been involved in significant abuse relating to money laun-
dering, the financing of terrorism, proliferation finance, serious
tax fraud, or any other financial crime, not later than 90
days after the date on which the Secretary makes the deter-
mination, the Secretary shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representa-
tives a report that explains the reasons for the determination
and any administrative or legislative recommendations to pre-
vent such abuse.
‘‘(2) C
LASSIFIED ANNEX
.—The report required by paragraph
(1)—
‘‘(A) shall be submitted in unclassified form; and
‘‘(B) may include a classified annex.’’.
(b) C
ONFORMING
A
MENDMENTS
.—Title 31, United States Code,
is amended—
(1) in section 5321(a)—
(A) in paragraph (1), by striking ‘‘sections 5314 and
5315’’ each place that term appears and inserting ‘‘sections
5314, 5315, and 5336’’; and
(B) in paragraph (6), by inserting ‘‘(except section
5336)’’ after ‘‘subchapter’’ each place that term appears;
(2) in section 5322, by striking ‘‘section 5315 or 5324’’
each place that term appears and inserting ‘‘section 5315, 5324,
or 5336’’; and
(3) in the table of sections for chapter 53, as amended
by sections 6306(b)(1), 6307(b), and 6313(b) of this division,
by adding at the end the following:
‘‘5336. Beneficial ownership information reporting requirements.’’.
(c) R
EPORTING
R
EQUIREMENTS FOR
F
EDERAL
C
ONTRACTORS
.—
188
H. R. 6395—1237
(1) I
N GENERAL
.—Not later than 2 years after the date
of enactment of this Act, the Administrator for Federal Procure-
ment Policy shall revise the Federal Acquisition Regulation
maintained under section 1303(a)(1) of title 41, United States
Code, to require any contractor or subcontractor that is subject
to the requirement to disclose beneficial ownership information
under section 5336 of title 31, United States Code, as added
by subsection (a) of this section, to provide the information
required to be disclosed under such section to the Federal
Government as part of any bid or proposal for a contract with
a value threshold in excess of the simplified acquisition
threshold under section 134 of title 41, United States Code.
(2) A
PPLICABILITY
.—The revision required under paragraph
(1) shall not apply to a covered contractor or subcontractor,
as defined in section 847 of the National Defense Authorization
Act for Fiscal Year 2020 (Public Law 116–92), that is subject
to the beneficial ownership disclosure and review requirements
under that section.
(d) R
EVISED
D
UE
D
ILIGENCE
R
ULEMAKING
.—
(1) I
N GENERAL
.—Not later than 1 year after the effective
date of the regulations promulgated under section 5336(b)(4)
of title 31, United States Code, as added by subsection (a)
of this section, the Secretary of the Treasury shall revise the
final rule entitled ‘‘Customer Due Diligence Requirements for
Financial Institutions’’ (81 Fed. Reg. 29397 (May 11, 2016))
to— (A) bring the rule into conformance with this division
and the amendments made by this division;
(B) account for the access of financial institutions to
beneficial ownership information filed by reporting compa-
nies under section 5336, and provided in the form and
manner prescribed by the Secretary, in order to confirm
the beneficial ownership information provided directly to
the financial institutions to facilitate the compliance of
those financial institutions with anti-money laundering,
countering the financing of terrorism, and customer due
diligence requirements under applicable law; and
(C) reduce any burdens on financial institutions and
legal entity customers that are, in light of the enactment
of this division and the amendments made by this division,
unnecessary or duplicative.
(2) C
ONFORMANCE
.—
(A) I
N GENERAL
.—In carrying out paragraph (1), the
Secretary of the Treasury shall rescind paragraphs (b)
through (j) of section 1010.230 of title 31, Code of Federal
Regulations upon the effective date of the revised rule
promulgated under this subsection.
(B) R
ULE OF CONSTRUCTION
.—Nothing in this section
may be construed to authorize the Secretary of the
Treasury to repeal the requirement that financial institu-
tions identify and verify beneficial owners of legal entity
customers under section 1010.230(a) of title 31, Code of
Federal Regulations.
(3) C
ONSIDERATIONS
.—In fulfilling the requirements under
this subsection, the Secretary of the Treasury shall consider—
(A) the use of risk-based principles for requiring reports
of beneficial ownership information;
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H. R. 6395—1238
(B) the degree of reliance by financial institutions on
information provided by FinCEN for purposes of obtaining
and updating beneficial ownership information;
(C) strategies to improve the accuracy, completeness,
and timeliness of the beneficial ownership information
reported to the Secretary; and
(D) any other matter that the Secretary determines
is appropriate.
TITLE LXV—MISCELLANEOUS
Sec. 6501. Investigations and prosecution of offenses for violations of the securities
laws.
Sec. 6502. GAO and Treasury studies on beneficial ownership information report-
ing requirements.
Sec. 6503. GAO study on feedback loops.
Sec. 6504. GAO CTR study and report.
Sec. 6505. GAO studies on trafficking.
Sec. 6506. Treasury study and strategy on trade-based money laundering.
Sec. 6507. Treasury study and strategy on money laundering by the People’s Re-
public of China.
Sec. 6508. Treasury and Justice study on the efforts of authoritarian regimes to ex-
ploit the financial system of the United States.
Sec. 6509. Authorization of appropriations.
Sec. 6510. Discretionary surplus funds.
Sec. 6511. Severability.
SEC. 6501. INVESTIGATIONS AND PROSECUTION OF OFFENSES FOR
VIOLATIONS OF THE SECURITIES LAWS.
(a) I
N
G
ENERAL
.—Section 21(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78u(d)) is amended—
(1) in paragraph (3)—
(A) in the paragraph heading—
(i) by inserting ‘‘C
IVIL
’’ before ‘‘M
ONEY PENALTIES
’’;
and (ii) by striking ‘‘
IN CIVIL ACTIONS
’’ and inserting
‘‘
AND AUTHORITY TO SEEK DISGORGEMENT
’’;
(B) in subparagraph (A), by striking ‘‘jurisdiction to
impose’’ and all that follows through the period at the
end and inserting the following: ‘‘jurisdiction to—
‘‘(i) impose, upon a proper showing, a civil penalty
to be paid by the person who committed such violation;
and ‘‘(ii) require disgorgement under paragraph (7) of
any unjust enrichment by the person who received
such unjust enrichment as a result of such violation.’’;
and
(C) in subparagraph (B)—
(i) in clause (i), in the first sentence, by striking
‘‘the penalty’’ and inserting ‘‘a civil penalty imposed
under subparagraph (A)(i)’’;
(ii) in clause (ii), by striking ‘‘amount of penalty’’
and inserting ‘‘amount of a civil penalty imposed under
subparagraph (A)(i)’’; and
(iii) in clause (iii), in the matter preceding item
(aa), by striking ‘‘amount of penalty for each such
violation’’ and inserting ‘‘amount of a civil penalty
imposed under subparagraph (A)(i) for each violation
described in that subparagraph’’;
190
d
TNTW.T0N
S
ST.
BenecialOwnershipInformation
FrequentlyAskedQuestions
PP1PPdPOPTPPddOOPP
modifyanyobligationsimposedbystatuteorregulation.PleaserefertotheBenecial
OwnershipInformationReportingRuleandBenecialOwnershipInformation
AccessandSafeguardsRule,availableatwww.ncen.gov/boi,fordetailsonspecic
provisions.FinCENexpectstopublishfurtherguidanceinthefuture.Questionson
anyofthiscontentcanbedirectedtohttps://www.ncen.gov/contact
A.GeneralQuestions
A.1. Whatisbenecialownershipinformation?
Benecialownershipinformationreferstoidentifyinginformationaboutthe
individualswhodirectlyorindirectlyownorcontrolacompany.
[IssuedMarch24,2023]
A.2. Whydocompanieshavetoreportbenecialownershipinformation
totheU.SDepartmentoftheTreasury?
In2021,CongresspassedtheCorporateTransparencyActonabipartisanbasis.This
lawcreatesanewbenecialownershipinformationreportingrequirementaspartof
theU.S.government’seortstomakeitharderforbadactorstohideorbenetfrom
theirill-gottengainsthroughshellcompaniesorotheropaqueownershipstructures.
[IssuedSeptember18,2023]
A.3. UndertheCorporateTransparencyAct,whocanaccessbenecial
ownershipinformation?
FinCENwillpermitFederal,State,local,andTribalocials,aswellascertain
foreignocialswhosubmitarequestthroughaU.S.Federalgovernmentagency,to
obtainbenecialownershipinformationforauthorizedactivitiesrelatedtonational
security,intelligence,andlawenforcement.Financialinstitutionswillhaveaccess
tobenecialownershipinformationincertaincircumstances,withtheconsentof
thereportingcompany.Thosenancialinstitutions’regulatorswillalsohaveaccess
tobenecialownershipinformationwhentheysupervisethenancialinstitutions.
FinCENpublishedtherulethatwillgovernaccesstoandprotectionofbenecial
ownershipinformationonDecember22,2023.Benecialownershipinformation
reportedtoFinCENwillbestoredinasecure,non-publicdatabaseusingrigorous
informationsecuritymethodsandcontrolstypicallyusedintheFederalgovernment
toprotectnon-classiedyetsensitiveinformationsystemsatthehighestsecurity
level.FinCENwillworkcloselywiththoseauthorizedtoaccessbenecialownership
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TQTPPPdOPOPTPOPTTTTPTTR
thereportedinformationonlyforauthorizedpurposesandhandlinginawaythat
protectsitssecurityandcondentiality.
[UpdatedJanuary4,2024]
A.4. HowwillcompaniesbecomeawareoftheBOIreportingrequirements?
FinCENisengagedinarobustoutreachandeducationcampaigntoraiseawareness
ofandhelpreportingcompaniesunderstandthenewreportingrequirements.
Thatcampaigninvolvesvirtualandin-personoutreacheventsandcomprehensive
guidanceinavarietyofformatsandlanguages,includingmultimediacontentand
PSmallEntityComplianceGuide,aswellasnewchannelsofcommunication,
includingsocialmediaplatforms.FinCENisalsoengagingwithgovernmental
ocesatthefederalandstatelevels,smallbusinessandtradeassociations,and
TPPR
FinCENwillcontinuetoprovideguidance,information,andupdatesrelatedtothe
BOIreportingrequirementsonitsBOIwebpage,www.ncen.gov/boi.Subscribe
PPtoreceiveupdatesviaemailfromFinCENaboutBOIreportingobligations.
[IssuedDecember12,2023]
A.5. HowisanIndianTribedenedundertheCorporateTransparencyAct?
ForpurposesofreportingbenecialownershipinformationtoFinCEN,“Indian
Tribe”meansanyIndianorAlaskaNativetribe,band,nation,pueblo,village,or
communitythattheSecretaryoftheInterioracknowledgestoexistasanIndian
tribe.TheSecretaryoftheInteriorisrequiredtopublishannuallyalistofall
recognizedIndianTribesintheFederalRegister(https://www.federalregister.gov/
documents/2024/01/08/2024-00109/indian-entities-recognized-by-and-eligible-
to-receive-services-from-the-united-states-bureau-of).
[IssuedJune10,2024]
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B.ReportingProcess
B.1. Shouldmycompanyreportbenecialownershipinformationnow?
FinCENlaunchedtheBOIE-Filingwebsiteforreportingbenecialownership
information(https://boieling.ncen.gov)onJanuary1,2024.
• AreportingcompanycreatedorregisteredtodobusinessbeforeJanuary1,
2024,willhaveuntilJanuary1,2025,toleitsinitialBOIreport.
• Areportingcompanycreatedorregisteredin2024willhave90calendardays
toleafterreceivingactualorpublicnoticethatitscreationorregistrationis
eective.
• AreportingcompanycreatedorregisteredonorafterJanuary1,2025,will
have30calendardaystoleafterreceivingactualorpublicnoticethatits
creationorregistrationiseective.
[UpdatedJanuary4,2024]
B.2. WhendoIneedtoreportmycompany’sbenecialownership
informationtoFinCEN?
AreportingcompanycreatedorregisteredtodobusinessbeforeJanuary1,2024,will
haveuntilJanuary1,2025toleitsinitialbenecialownershipinformationreport.
AreportingcompanycreatedorregisteredonorafterJanuary1,2024,andbefore
January1,2025,willhave90calendardaysafterreceivingnoticeofthecompany’s
creationorregistrationtoleitsinitialBOIreport.This90-calendardaydeadline
runsfromthetimethecompanyreceivesactualnoticethatitscreationor
registrationiseective,orafterasecretaryofstateorsimilarocerstprovides
publicnoticeofitscreationorregistration,whicheverisearlier.
ReportingcompaniescreatedorregisteredonorafterJanuary1,2025,willhave
30calendardaysfromactualorpublicnoticethatthecompany’screationor
registrationiseectivetoletheirinitialBOIreportswithFinCEN.
[UpdatedDecember1,2023]
B.3. WhenwillFinCENacceptbenecialownershipinformationreports?
FinCENwillbeginacceptingbenecialownershipinformationreportsonJanuary1,
2024.Benecialownershipinformationreportswillnotbeacceptedbeforethen.
[IssuedMarch24,2023]
B.4. Willtherebeafeeforsubmittingabenecialownershipinformation
reporttoFinCEN?
No.Thereisnofeeforsubmittingyourbenecialownershipinformationreport
toFinCEN.
[UpdatedJanuary4,2024]
B.5. HowwillIreportmycompany’sbenecialownershipinformation?
Ifyouarerequiredtoreportyourcompany’sbenecialownershipinformationto
FinCEN,youwilldosoelectronicallythroughasecurelingsystemavailablevia
FinCEN’sBOIE-Filingwebsite(https://boieling.ncen.gov).
[UpdatedJanuary4,2024]
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B.6. WherecanIndtheformtoreport?
AccesstheformbygoingtoFinCEN’sBOIE-Filingwebsite(https://boieling.
ncen.gov)andselect“FileBOIR.”
[UpdatedJanuary4,2024]
B.7. Isareportingcompanyrequiredtouseanattorneyoracertied
publicaccountant(CPA)tosubmitbenecialownershipinformation
toFinCEN?
No.FinCENexpectsthatmany,ifnotmost,reportingcompanieswillbeableto
submittheirbenecialownershipinformationtoFinCENontheirownusingthe
guidanceFinCENhasissued.Reportingcompaniesthatneedhelpmeetingtheir
reportingobligationscanconsultwithprofessionalserviceproviderssuchaslawyers
oraccountants.
[IssuedNovember16,2023]
B.8. WhocanleaBOIreportonbehalfofareportingcompany,andwhat
informationwillbecollectedonlers?
Anyonewhomthereportingcompanyauthorizestoactonitsbehalf—suchasan
employee,owner,orthird-partyserviceprovider—mayleaBOIreportonthe
reportingcompany’sbehalf.WhensubmittingtheBOIreport,individuallers
shouldbepreparedtoprovidebasiccontactinformationaboutthemselves,including
PTPOPTOOPPP
[IssuedDecember12,2023]
C.ReportingCompany
C.1. Whatcompanieswillberequiredtoreportbenecialownership
informationtoFinCEN?
CompaniesrequiredtoreportarecalledPPPbdPQ
reportingcompanies:
• arecorporations,limitedliabilitycompanies,and
anyotherentitiescreatedbythelingofadocumentwithasecretaryofstate
oranysimilaroceintheUnitedStates.
• areentities(includingcorporationsandlimited
liabilitycompanies)formedunderthelawofaforeigncountrythathave
registeredtodobusinessintheUnitedStatesbythelingofadocumentwith
asecretaryofstateoranysimilaroce.
Thereare23typesofentitiesthatareexemptfromthereportingrequirements(see
QuestionC.2).Carefullyreviewthequalifyingcriteriabeforeconcludingthatyour
companyisexempt.
dforbenecialownershipinformationreporting
includesthefollowingowcharttohelpidentifyifacompanyisareportingcompany(see
Chapter1.1,“Ismycompanya“reportingcompany”?”).
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[IssuedSeptember18,2023]
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C.2. Aresomecompaniesexemptfromthereportingrequirement?
Yes,23typesofentitiesareexemptfromthebenecialownershipinformation
reportingrequirements.Theseentitiesincludepubliclytradedcompaniesmeeting
speciedrequirements,manynonprots,andcertainlargeoperatingcompanies.
Thefollowingtablesummarizesthe23exemptions:
ExemptionNo. ExemptionShortTitle
Securitiesreportingissuer
2 Governmentalauthority
3-
4 Creditunion
5 Depositoryinstitutionholdingcompany
6 Moneyservicesbusiness
Brokerordealerinsecurities
8 Securitiesexchangeorclearingagency
9 OtherExchangeActregisteredentity
10 Investmentcompanyorinvestmentadviser
Venturecapitalfundadviser
12 Insurancecompany
13 State-licensedinsuranceproducer
14 CommodityExchangeActregisteredentity
15 Accountingrm
16 Publicutility
Financialmarketutility
18 Pooledinvestmentvehicle
19 PPPTd
20 Entityassistingatax-exemptentity
21 Largeoperatingcompany
22 Subsidiaryofcertainexemptentities
23 Inactiveentity
dincludesthistableandchecklistsforeachofthe
23exemptionsthatmayhelpdeterminewhetheracompanymeetsanexemption(see
Chapter1.2,“Ismycompanyexemptfromthereportingrequirements?”).Companies
shouldcarefullyreviewthequalifyingcriteriabeforeconcludingthattheyareexempt.
PleaseseeadditionalFAQsaboutreportingcompanyexemptionsin“L.ReportingCompany
Exemptions”below.
[IssuedSeptember18,2023]
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C.3. Arecertaincorporateentities,suchasstatutorytrusts,businesstrusts,or
foundations,reportingcompanies?
Itdepends.Adomesticentitysuchasastatutorytrust,businesstrust,or
foundationisareportingcompanyonlyifitwascreatedbythelingofadocument
withasecretaryofstateorsimilaroce.Likewise,aforeignentityisareporting
companyonlyifitledadocumentwithasecretaryofstateorasimilaroceto
registertodobusinessintheUnitedStates.
Statelawsvaryonwhethercertainentitytypes,suchastrusts,requirethelingofa
documentwiththesecretaryofstateorsimilarocetobecreatedorregistered.
• IfatrustiscreatedinaU.S.jurisdictionthatrequiressuchling,thenitisa
reportingcompany,unlessanexemptionapplies.
Similarly,notallstatesrequireforeignentitiestoregisterbylingadocumentwith
asecretaryofstateorasimilarocetodobusinessinthestate.
• However,ifaforeignentityhastoleadocumentwithasecretaryofstate
orasimilarocetoregistertodobusinessinastate,anddoesso,itisa
reportingcompany,unlessanexemptionapplies.
Entitiesshouldalsoconsiderifanyexemptionstothereportingrequirements
applytothem.Forexample,afoundationmaynotberequiredtoreportbenecial
ownershipinformationtoFinCENifthefoundationqualiesforthetax-exempt
PTdPPT
Chapter1ofFinCEN’sd(“Doesmycompanyhavetoreportits
benecialowners?”)mayassistcompaniesinidentifyingwhethertheyneedtoreport.
[IssuedNovember16,2023]
C.4. Isatrustconsideredareportingcompanyifitregisterswithacourtoflaw
forthepurposeofestablishingthecourt’sjurisdictionoveranydisputes
involvingthetrust?
No.Theregistrationofatrustwithacourtoflawmerelytoestablishthecourt’s
jurisdictionoveranydisputesinvolvingthetrustdoesnotmakethetrusta
reportingcompany.
[IssuedNovember16,2023]
C.5. Doestheactivityorrevenueofacompanydeterminewhetheritisa
reportingcompany?
Sometimes.Areportingcompanyis(1)anycorporation,limitedliabilitycompany,
orothersimilarentitythatwascreatedintheUnitedStatesbythelingofa
documentwithasecretaryofstateorsimilaroce(inwhichcaseitisadomestic
reportingcompany),oranylegalentitythathasbeenregisteredtodobusinessin
theUnitedStatesbythelingofadocumentwithasecretaryofstateorsimilar
oce(inwhichcaseitisaforeignreportingcompany),that(2)doesnotqualifyfor
anyoftheexemptionsprovidedundertheCorporateTransparencyAct.Anentity’s
activitiesandrevenue,alongwithotherfactorsinsomecases,canqualifyitfor
oneofthoseexemptions.Forexample,thereisanexemptionforcertaininactive
entities,andanotherforanycompanythatreportedmorethan$5millioningross
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receiptsorsalesinthepreviousyearandsatisesotherexemptioncriteria.Neither
engagingsolelyinpassiveactivitieslikeholdingrentalproperties,forexample,
norbeingunprotablenecessarilyexemptsanentityfromtheBOIreporting
PTPP
dprovidesadditionalinformationconcerning
exemptionsinChapter1.2,“Ismycompanyexemptfromthereportingrequirements?”
[IssuedDecember12,2023]
C.6. Isasoleproprietorshipareportingcompany?
No,unlessasoleproprietorshipwascreated(or,ifaforeignsoleproprietorship,
registeredtodobusiness)intheUnitedStatesbylingadocumentwithasecretary
ofstateorsimilaroce.Anentityisareportingcompanyonlyifitwascreated
(or,ifaforeigncompany,registeredtodobusiness)intheUnitedStatesbyling
suchadocument.Filingadocumentwithagovernmentagencytoobtain(1)anIRS
employeridenticationnumber,(2)actitiousbusinessname,or(3)aprofessional
oroccupationallicensedoesnotcreateanewentity,andthereforedoesnotmakea
soleproprietorshiplingsuchadocumentareportingcompany.
[IssuedDecember12,2023]
C.7. CanacompanycreatedorregisteredinaU.S.territorybeconsidereda
reportingcompany?
Yes.Inadditiontocompaniesinthe50statesandtheDistrictofColumbia,a
companythatiscreatedorregisteredtodobusinessbythelingofadocument
withaU.S.territory’ssecretaryofstateorsimilaroce,andthatdoesnotqualify
foranyexemptionstothereportingrequirements,isrequiredtoreportbenecial
ownershipinformationtoFinCEN.U.S.territoriesaretheCommonwealthofPuerto
Rico,theCommonwealthoftheNorthernMarianaIslands,AmericanSamoa,Guam,
andtheU.S.VirginIslands.
[IssuedJanuary12,2024]
C.8. DotheBOIreportingrequirementsapplytoS-Corporations?
Yes.Acorporationtreatedasapass-throughentityunderSubchapterSofthe
InternalRevenueCode(an“SCorporation”or“S-Corp”)thatqualiesasa
reportingcompany—i.e.,thatiscreatedorregisteredtodobusinessbythelingof
adocumentwithasecretaryofstateorsimilaroce,anddoesnotqualifyforany
oftheexemptionstothereportingrequirements—mustcomplywiththereporting
requirements.TheS-Corp’spass-throughstructurefortaxpurposesdoesnot
aectitsBOIreportingobligations.Inparticular,pass-throughtreatmentunder
SubchapterSdoesnotqualifyanS-Corpasa“tax-exemptentity”underFinCEN
-:PTRPRT
[IssuedApril18,2024]
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C.9. Ifadomesticcorporationorlimitedliabilitycompanyisnotcreated
bythelingofadocumentwithasecretaryofstateorsimilaroce,isit
areportingcompany?
No.WhileFinCEN’sBOIreportingregulationsdeneadomesticreportingcompany
asincludingacorporationorlimitedliabilitycompany,theinclusionofthose
entitiesisbasedonanunderstandingthatdomesticcorporationsandLLCsare
generallycreatedbythelingofadocumentwithasecretaryofstateorsimilar
oce.Inanunusualcircumstancewhereadomesticcorporationorlimitedliability
companyiscreated,butnotbythelingofadocumentwithasecretaryofstateor
similaroce,suchanentityisnotareportingcompany.
[IssuedApril18,2024]
C.10. Arehomeownersassociationsreportingcompanies?
Itdepends.Homeownersassociations(HOAs)cantakedierentforms.Aswith
anyentity,ifanHOAwasnotcreatedbythelingofadocumentwithasecretary
ofstateorsimilaroce,thenitisnotadomesticreportingcompany.An
incorporatedHOAorotherHOAthatwascreatedbysuchalingalsomayqualify
foranexemptionfromthereportingrequirements.Forexample,HOAsrecognized
bytheIRSassection501(c)(4)socialwelfareorganizations(orthatclaim
suchstatusandmeettherequirements)mayqualifyforthetax-exemptentity
exemption.AnincorporatedHOAthatisnotasection501(c)(4)organization,
however,mayfallwithinthereportingcompanydenitionandthereforebe
requiredtoreportBOItoFinCEN.
[UpdatedJune10,2024]
C.11. AreentitiesformedunderTriballawrequiredtoreportbenecialownership
information?
Yes,iftheentitymeetsthereportingcompanydenitionanddoesnotqualify
foranyexemptionstothereportingrequirements.SeeQuestionC.1formore
informationonwhatentitiesarereportingcompanies.
WhileIndianTribeshavevaryinglegalentityformationpractices,someallow
individualstoformlegalentitiessuchascorporationsorLLCsunderTriballaw
bythelingofadocument(suchasArticlesofIncorporation)withaTribaloce
oragencywhoseroutinefunctionsincludecreatingsuchentitiespursuantto
suchlings.Tribalocesoragenciesthatperformthisfunctionmaybecalled
somethingotherthana“secretaryofstate,”buttheyareperformingafunction
similartothatofatypicalsecretaryofstate’soce.Asaresult,alegalentity
createdbyalingwithsuchTribaloceoragencyisareportingcompanyandis
requiredtolebenecialownershipinformationwithFinCEN,unlessitqualies
QPPT
Notethat,undertheCorporateTransparencyAct,alegalentityisareporting
companyonlyifitiscreatedorregisteredtodobusiness“underthelawsofaState
orIndianTribe.”Tribalcorporationsformedunderfederallawthroughtheissuance
ofacharterofincorporationbytheSecretaryoftheInterior—suchasthosecreated
undersection3oftheOklahomaIndianWelfareAct(25U.S.C.5203),orsection17
oftheIndianReorganizationActof1934(25U.S.C.5124)—arenotcreatedbythe
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lingofadocumentwithasecretaryofstateorsimilaroceunderthelawsofan
Indiantribe,andarethereforenotreportingcompaniesrequiredtoreportbenecial
ownershipinformationtoFinCEN.
Notealsothat“governmentalauthorities”arenotrequiredtoreportbenecial
ownershipinformationtoFinCEN.Forthispurpose,a“governmentalauthority”is
anentitythatis(1)establishedunderthelawsoftheUnitedStates,anIndianTribe,
aState,orapoliticalsubdivisionofaState,orunderaninterstatecompactbetween
twoormoreStates,andthat(2)exercisesgovernmentalauthorityonbehalfofthe
UnitedStatesoranysuchIndianTribe,State,orpoliticalsubdivision.Thus,aTribal
entitythatissucha“governmentalauthority”isnotrequiredtoreportbenecial
ownershipinformationtoFinCEN.Thiscategoryincludestriballychartered
corporationsandstate-charteredTribalentities,ifthosecorporationsorentities
exercisegovernmentalauthorityonaTribe’sbehalf.
Certainsubsidiariesofgovernmentalauthoritiesarealsoexemptfromthe
requirementtoreportbenecialownershipinformationtoFinCEN.Anentity
qualiesforthisexemptionifitsownershipinterestsarecontrolled(intheir
entirety)orwhollyowned,directlyorindirectly,byagovernmentalauthority.Thus,
forexample,ifatriballycharteredcorporation(orstate-charteredTribalentity)
exercisesgovernmentalauthorityonaTribe’sbehalf,andthattriballychartered
corporation(orstate-charteredTribalentity)controlsorwhollyownstheownership
interestsofanotherentity,thenboththetriballycharteredcorporation(orstate-
charteredTribalentity)andthatsubsidiaryentityareexemptfromtherequirement
toreportbenecialownershipinformationtoFinCEN.SeeQuestionsL.3andL.6for
moreinformationonthis“subsidiaryexemption.”
Otherexemptionstothereportingrequirements,suchastheexemptionfor“tax-
exemptentities,”mayalsoapplytocertainentitiesformedunderTriballaw.
dincludesatableandchecklistsforeachofthe23
exemptionsthatmayhelpdeterminewhetheracompanymeetsanexemption(seeChapter
1.2,“Ismycompanyexemptfromthereportingrequirements?”).Companiesshouldcarefully
reviewthequalifyingcriteriabeforeconcludingthattheyareexempt.Pleaseseeadditional
FAQsaboutreportingcompanyexemptionsin“L.ReportingCompanyExemptions”below.
[IssuedJune10,2024]
C.12. Dobenecialownershipinformationreportingrequirementsapplyto
companiescreatedorregisteredbeforetheCorporateTransparencyActwas
enacted(January1,2021)?
Yes.Benecialownershipinformationreportingrequirementsapplytoall
companiesthatqualifyas“reportingcompanies”(seeQuestionC.1),regardless
ofwhentheywerecreatedorregistered.Companiesarenotrequiredtoreport
benecialownershipinformationtoFinCENiftheyareexempt(seeQuestionC.2
and,generally,SectionL)orceasedtoexistaslegalentitiesbeforeJanuary1,2024
(seeQuestionC.13).
[IssuedJuly8,2024]
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C.13. Isacompanyrequiredtoreportitsbenecialownershipinformationto
FinCENifthecompanyceasedtoexistbeforereportingrequirementswent
intoeectonJanuary1,2024?
Acompanyisnotrequiredtoreportitsbenecialownershipinformationto
FinCENifitceasedtoexistasalegalentitybeforeJanuary1,2024,meaningthatit
entirelycompletedtheprocessofformallyandirrevocablydissolving.Acompany
thatceasedtoexistasalegalentitybeforethebenecialownershipinformation
reportingrequirementsbecameeectiveJanuary1,2024,wasneversubjecttothe
reportingrequirementsandthusisnotrequiredtoreportitsbenecialownership
informationtoFinCEN.
AlthoughstateorTriballawmayvary,acompanytypicallycompletestheprocess
offormallyandirrevocablydissolvingby,forexample,lingdissolutionpaperwork
withitsjurisdictionofcreationorregistration,receivingwrittenconrmationof
dissolution,payingrelatedtaxesorfees,ceasingtoconductanybusiness,and
windingupitsaairs(e.g.,fullyliquidatingitselfandclosingallbankaccounts).
Ifareportingcompany(seeQuestionC.1)continuedtoexistasalegalentityforany
periodoftimeonorafterJanuary1,2024(i.e.,didnotentirelycompletetheprocess
offormallyandirrevocablydissolvingbeforeJanuary1,2024),thenitisrequired
toreportitsbenecialownershipinformationtoFinCEN,evenifthecompanyhad
woundupitsaairsandceasedconductingbusinessbeforeJanuary1,2024.
Similarly,ifareportingcompanywascreatedorregisteredonorafterJanuary1,
2024,andsubsequentlyceasedtoexist,thenitisrequiredtoreportitsbenecial
ownershipinformationtoFinCEN—evenifitceasedtoexistbeforeitsinitial
benecialownershipinformationreportwasdue.
Forspecicsonhowtodeterminewhenacompanyceasestoexistasalegalentity,
consultthelawofthejurisdictioninwhichthecompanywascreatedorregistered.
Acompanythatisadministrativelydissolvedorsuspended—because,forexample,
itfailedtopayalingfeeorcomplywithcertainjurisdictionalrequirements—
generallydoesnotceasetoexistasalegalentityunlessthedissolutionor
suspensionbecomespermanent.
[IssuedJuly8,2024]
C.14. Ifareportingcompanycreatedorregisteredin2024orlaterwindsupits
aairsandceasestoexistbeforeitsinitialBOIreportisduetoFinCEN,is
thecompanystillrequiredtosubmitthatinitialreport?
Yes.Reportingcompaniescreatedorregisteredin2024mustreporttheirbenecial
ownershipinformationtoFinCENwithin90daysofreceivingactualorpublicnotice
ofcreationorregistration.Reportingcompaniescreatedorregisteredin2025or
latermustreporttheirbenecialownershipinformationtoFinCENwithin30days
ofreceivingactualorpublicnoticeofcreationorregistration.Theseobligations
remainapplicabletoreportingcompaniesthatceasetoexistaslegalentities—
meaningwounduptheiraairs,ceasedconductingbusiness,andentirelycompleted
theprocessofformallyandirrevocablydissolving—beforetheirinitialbenecial
ownershipreportsaredue.Ifareportingcompanylesaninitialbenecial
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ownershipinformationreportandthenceasestoexist,thenthereisnorequirement
forthereportingcompanytoleanadditionalreportwithFinCENnotingthatthe
companyhasceasedtoexist.
[IssuedJuly8,2024]
D.BenecialOwner
D.1. Whoisabenecialownerofareportingcompany?
Abenecialownerisanindividualwhoeitherdirectlyorindirectly:(1)exercises
substantialcontroloverareportingcompany(seeQuestionD.2),or(2)owns
orcontrolsatleast25percentofareportingcompany’sownershipinterests
(seeQuestionD.4).Becausebenecialownersmustbeindividuals(i.e.,natural
persons),trusts,corporations,orotherlegalentitiesarenotconsideredtobe
benecialowners.However,inspeciccircumstances,informationaboutanentity
maybereportedinlieuofinformationaboutabenecialowner(seeQuestionD.12).
dprovideschecklistsandexamplesthatmayassist
inidentifyingbenecialowners(seeChapter2.3“WhatstepscanItaketoidentifymy
company’sbenecialowners?”).
[UpdatedApril18,2024]
D.2. Whatissubstantialcontrol?
Anindividualcanexercisesubstantialcontroloverareportingcompanyinfour
dierentways.Iftheindividualfallsintoanyofthecategoriesbelow,theindividual
isexercisingsubstantialcontrol:
• Theindividualisaseniorocer(thecompany’spresident,chiefnancial
ocer,generalcounsel,chiefexecutiveoce,chiefoperatingocer,orany
otherocerwhoperformsasimilarfunction).
• Theindividualhasauthoritytoappointorremovecertainocersora
majorityofdirectors(orsimilarbody)ofthereportingcompany.
• Theindividualisanimportantdecision-makerforthereportingcompany.
SeeQuestionD.3formoreinformation.
• Theindividualhasanyotherformofsubstantialcontroloverthereporting
companyasexplainedfurtherinFinCEN’sd(
Chapter2.1,“Whatissubstantialcontrol?”).
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[IssuedSeptember18,2023]
203
d
14
D.3. Oneoftheindicatorsofsubstantialcontrolisthattheindividualisan
importantdecision-maker.Whatareimportantdecisions?
Importantdecisionsincludedecisionsaboutareportingcompany’sbusiness,
nances,andstructure.Anindividualthatdirects,determines,orhassubstantial
inuenceovertheseimportantdecisionsexercisessubstantialcontrolovera
reportingcompany.Chapter2.1,“Whatissubstantialcontrol?”ofFinCEN’sd
providesthefollowinginformation:
[IssuedSeptember18,2023]
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D.4. Whatisanownershipinterest?
bPTTPPTRPPdRPPPTPbPT
rightsinthereportingcompany.Examplesofownershipinterestsincludesharesof
equity,stock,votingrights,oranyothermechanismusedtoestablishownership.
Chapter2.2,“Whatisownershipinterest?”ofFinCEN’sd
discussesownershipinterestsandsetsoutstepstoassistindeterminingthepercentageof
ownershipinterestsheldbyanindividual.
[IssuedSeptember18,2023]
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D.5. Whoqualiesforanexceptionfromthebenecialownerdenition?
Thereareveinstancesinwhichanindividualwhowouldotherwisebeabenecial
ownerofareportingcompanyqualiesforanexception.Inthosecases,thereporting
companydoesnothavetoreportthatindividualasabenecialownertoFinCEN.
dincludesachecklisttohelpdeterminewhether
anyexceptionsapplytoindividualswhomightotherwisequalifyasbenecialowners(see
Chapter2.4.“Whoqualiesforanexceptionfromthebenecialownerdenition?”).
[IssuedSeptember18,2023]
D.6. Ismyaccountantorlawyerconsideredabenecialowner?
Accountantsandlawyersgenerallydonotqualifyasbenecialowners,butthatmay
OPPOPbPTRPQPO
Accountantsandlawyerswhoprovidegeneralaccountingorlegalservicesarenot
consideredbenecialownersbecauseordinary,arms-lengthadvisoryorother
third-partyprofessionalservicestoareportingcompanyarenotconsideredtobe
“substantialcontrol”(seeQuestionD.2).Inaddition,alawyeroraccountantwho
isdesignatedasanagentofthereportingcompanymayqualifyforthe“nominee,
intermediary,custodian,oragent”exceptionfromthebenecialownerdenition.
However,anindividualwhoholdsthepositionofgeneralcounselinareporting
companyisa“seniorocer”ofthatcompanyandisthereforeabenecialowner
dincludesachecklisttohelpdeterminewhether
anindividualqualiesforanexceptiontothebenecialownerdenition(seeChapter2.4,
“Whoqualiesforanexceptionfromthebenecialownerdenition?”).
[UpdatedNovember16,2023]
D.7. Whatinformationshouldareportingcompanyreportaboutabenecial
ownerwhoholdstheirownershipinterestsinthereportingcompany
throughmultipleexemptentities?
Ifabenecialownerownsorcontrolstheirownershipinterestsinareporting
companycaRcentities,thenthenamesofQP
exemptentitiesmaybereportedtoFinCENinsteadoftheindividualbenecial
owner’sinformation.
Notethatthisspecialruledoesnotapplywhenanindividualownsorcontrols
ownershipinterestsinareportingcompanythroughPPOPP
entities.Inthatcase,thereportingcompanymustreporttheindividualasa
benecialowner(ifnoexceptionapplies),buttheexemptcompaniesdonotneedto
PTPO
dincludesmoreinformationaboutthisspecialreporting
ruleinChapter4.2,“WhatdoIreportifaspecialreportingruleappliestomycompany?”
[IssuedSeptember29,2023]
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d
D.8. Isanunaliatedcompanythatprovidesaservicetothereportingcompany
bymanagingitsday-to-dayoperations,butdoesnotmakedecisionson
importantmatters,abenecialownerofthereportingcompany?
Theunaliatedcompanyitselfcannotbeabenecialownerofthereporting
companybecauseabenecialownermustbeanindividual.Anyindividualsthat
exercisesubstantialcontroloverthereportingcompanythroughtheunaliated
companymustbereportedasbenecialownersofthereportingcompany.
However,individualswhodonotdirect,determine,orhavesubstantialinuence
overimportantdecisionsmadebythereportingcompany,anddonototherwise
exercisesubstantialcontrol,maynotbebenecialownersofthereportingcompany.
PleaseseeChapter2.1ofFinCEN’sd,“Whatissubstantial
control?”foradditionalinformationonhowtodeterminewhetheranindividualhas
substantialcontroloverareportingcompany.
[IssuedSeptember29,2023]
D.9. Isamemberofareportingcompany’sboardofdirectorsalwaysa
benecialownerofthereportingcompany?
No.Abenecialownerofacompanyisanyindividualwho,directlyorindirectly,
exercisessubstantialcontroloverareportingcompany,orwhoownsorcontrolsat
least25percentoftheownershipinterestsofareportingcompany.
Whetheraparticulardirectormeetsanyofthesecriteriaisaquestionthatthe
reportingcompanymustconsideronadirector-by-directorbasis.
dincludesadditionalinformationonhowto
determineifanindividualqualiesasabenecialownerinChapter2,“Whoisabenecial
ownerofmycompany?”.Thischapterincludesseparatesectionswithmoreinformation
aboutsubstantialcontrolandownershipinterest:Chapter2.1“Whatissubstantialcontrol?”
andChapter2.2“Whatisownershipinterest?”
[IssuedSeptember29,2023]
D.10. Isareportingcompany’sdesignated“partnershiprepresentative”or“tax
matterspartner”abenecialowner?
Itdepends.Areportingcompany’s“partnershiprepresentative,”asdenedin
26U.S.C.6223,or“taxmatterspartner,”asthetermwaspreviouslydenedin
now-repealed26U.S.C.6231(a)(7),isnotautomaticallyabenecialownerof
thereportingcompany.However,suchanindividualmayqualifyasabenecial
ownerofthereportingcompanyiftheindividualexercisessubstantialcontrolover
thereportingcompany,orownsorcontrolsatleast25percentofthecompany’s
bPTTPP
Chapter2ofFinCEN’sd(“Whoisabenecialownerofmy
company?”)hasadditionalinformationonhowtodetermineifanindividualqualiesasa
benecialownerofareportingcompany.
Notethata“partnershiprepresentative”or“taxmatterspartner”servinginthe
roleofadesignatedagentofthereportingcompanymayqualifyforthe“nominee,
intermediary,custodian,oragent”exceptionfromthebenecialownerdenition.
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dincludesadditionalinformationonsuchexemptions
inChapter2.4,“Whoqualiesforanexceptionfromthebenecialownerdenition?”
[IssuedNovember16,2023]
D.11.Whatshouldareportingcompanyreportifitsownershipisindispute?
Ifownershipofareportingcompanyisthesubjectofactivelitigationandan
initialBOIreporthasnotbeenled,apersonauthorizedbythecompanytoleits
benecialownershipinformationshouldcomplywiththerequirementsbyreporting:
• allindividualswhoexercisesubstantialcontroloverthecompany,and
• allindividualswhoownorcontrol,orhaveaclaimtoownershiporcontrol
of,atleast25percentownershipinterestsinthecompany.
IfaninitialBOIreporthasbeenled,andiftheresolutionofthelitigationleads
tothereportingcompanyhavingdierentbenecialownersfromthosereported
(forexample,becausesomeindividuals’claimstoownershiporcontrolhavebeen
rejected),thereportingcompanymustleanupdatedBOIreportwithin30calendar
OdQPTQPTTRT
[IssuedJanuary12,2024]
D.12. Whodoesareportingcompanyreportasabenecialownerifacorporate
entityownsorcontrols25percentormoreoftheownershipinterestsofthe
reportingcompany?
Ordinarily,suchareportingcompanyreportstheindividualswhoindirectlyeither
(1)exercisesubstantialcontroloverthereportingcompanyor(2)ownorcontrol
atleast25percentoftheownershipinterestsinthereportingcompanythrough
thecorporateentity.Itshouldnotreportthecorporateentitythatactsasan
intermediatefortheindividuals.
Foranexampleofhowtocalculatethepercentageofownershipinterestsanindividualowns
orcontrolsinareportingcompanyiftheindividual’sownershipinterestsareheldthrough
anintermediateentity,pleasereviewexample4inChapter2.3,“WhatstepscanItaketo
identifymycompany’sbenecialowners?”ofFinCEN’sd.
Twospecialrulescreateexceptionstothisgeneralruleinveryspeciccircumstances:
Areportingcompanymayreportthename(s)ofanexemptentityor
entitiesinlieuofanindividualbenecialownerwhoownsorcontrols
ownershipinterestsinthereportingcompanyentirelythroughownership
TPPTPPPPTdPTTP
2. Ifthebenecialownersofthereportingcompanyandtheintermediate
companyarethesameindividuals,areportingcompanymayreportthe
FinCENidentierandfulllegalnameofanintermediatecompanythrough
whichanindividualisabenecialownerofthereportingcompany.
dincludesadditionalinformationaboutthese
specialreportingrules(seeChapter4.2,“WhatdoIreportifaspecialreportingruleapplies
tomycompany?”).
[IssuedJanuary12,2024]
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D.13. Whoisthebenecialownerofahomeownersassociation?
Ahomeownersassociation(HOA)thatmeetsthereportingcompanydenitionand
doesnotqualifyforanyexemptionsmustreportitsbenecialowner(s).Abenecial
ownerisanyindividualwho,directlyorindirectly,exercisessubstantialcontrol
overareportingcompany,orownsorcontrolsatleast25percentoftheownership
interestsofareportingcompany.
Theremaybeinstancesinwhichnoindividualsownorcontrolatleast25percentof
theownershipinterestsofanHOAthatisareportingcompany.However,FinCEN
expectsthatatleastoneindividualexercisessubstantialcontrolovereachreporting
company.Individualswhomeetoneofthefollowingcriteriaareconsideredto
exercisesubstantialcontrolovertheHOA:
• theindividualisaseniorocer;
• theindividualhasauthoritytoappointorremovecertainocersora
majorityofdirectorsoftheHOA;
• theindividualisanimportantdecision-maker;or
• theindividualhasanyotherformofsubstantialcontrolovertheHOA.
[IssuedApril18,2024]
D.14.Canbenecialownersownorcontrolreportingcompaniesthroughtrusts?
Yes,benecialownerscanownorcontrolareportingcompanythroughtrusts.
Theycandosobyeitherexercisingsubstantialcontroloverareportingcompany
throughatrustarrangementorbyowningorcontrollingtheownershipinterestsof
areportingcompanythatareheldinatrust.
[IssuedApril18,2024]
D.15. Whoareareportingcompany’sbenecialownerswhenindividualsownor
controlthecompanythroughatrust?
Abenecialownerisanyindividualwhoeither:(1)exercisessubstantialcontrol
overareportingcompany,or(2)ownsorcontrolsatleast25percentofareporting
company’sownershipinterests.Exercisingsubstantialcontrolorowningor
controllingownershipinterestsmaybedirectorindirect,includingthroughany
contract,arrangement,understanding,relationship,orotherwise.
Trustarrangementsvary.Particularfactsandcircumstancesdeterminewhether
specictrustees,beneciaries,grantors,settlors,andotherindividualswithroles
inaparticulartrustarebenecialownersofareportingcompanywhoseownership
TPPPPOR
Forinstance,thetrusteeofatrustmaybeabenecialownerofareportingcompany
eitherbyexercisingsubstantialcontroloverthereportingcompany,orbyowningor
controllingatleast25percentoftheownershipinterestsinthatcompanythrough
atrustorsimilararrangement.Certainbeneciariesandgrantorsorsettlorsmay
alsoownorcontrolownershipinterestsinareportingcompanythroughatrust.
Thefollowingconditionsindicatethatanindividualownsorcontrolsownership
interestsinareportingcompanythroughatrust:
• atrustee(oranyotherindividual)hastheauthoritytodisposeoftrustassets;
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• abeneciaryisthesolepermissiblerecipientofincomeandprincipal
fromthetrust,orhastherighttodemandadistributionoforwithdraw
TdQPPQP
• agrantororsettlorhastherighttorevokethetrustorotherwisewithdraw
PPQP
Thismaynotbeanexhaustivelistoftheconditionsunderwhichanindividual
ownsorcontrolsownershipinterestsinareportingcompanythroughatrust.
Becausefactsandcircumstancesvary,theremaybeotherarrangementsunder
whichindividualsassociatedwithatrustmaybebenecialownersofanyreporting
companyinwhichthattrustholdsinterests.
[IssuedApril18,2024]
D.16. Howdoesareportingcompanyreportacorporatetrusteeasabenecialowner?
Forpurposesofthisquestion,“corporatetrustee”meansalegalentityratherthan
anindividualexercisingthepowersofatrusteeinatrustarrangement.
Ifareportingcompany’sownershipinterestsareownedorcontrolledthrough
atrustarrangementwithacorporatetrustee,thereportingcompanyshould
determinewhetheranyofthecorporatetrustee’sindividualbenecialowners
indirectlyownorcontrolatleast25percentoftheownershipinterestsofthe
reportingcompanythroughtheirownershipinterestsinthecorporatetrustee.
»Forexample,ifanindividualowns60percentofthecorporatetrusteeofa
trust,andthattrustholds50percentofareportingcompany’sownership
interests,thentheindividualownsorcontrols30percent(60percent×50
percent=30percent)ofthereportingcompany’sownershipinterestsandis
thereforeabenecialownerofthereportingcompany.
»Bycontrast,ifthesametrustonlyholds30percentofthereporting
company’sownershipinterests,thesameindividualcorporatetrusteeowner
onlyownsorcontrols18percent(60percent×30percent=18percent)of
thereportingcompany,andthusisnotabenecialownerofthereporting
companybyvirtueofownershiporcontrolofownershipinterests.
Thereportingcompanymay,butisnotrequiredto,reportthenameofthecorporate
trusteeinlieuofinformationaboutanindividualbenecialowneronlyifallofthe
followingthreeconditionsaremet:
• thecorporatetrusteeisanentitythatisexemptfromthereporting
PTPP
• theindividualbenecialownerownsorcontrolsatleast25percentof
ownershipinterestsinthereportingcompanybyvirtueofownership
interestsinthecorporatetrustee;O
• theindividualbenecialownerdoesnotexercisesubstantialcontroloverthe
reportingcompany.
Inadditiontoconsideringwhetherthebenecialownersofacorporatetrustee
ownorcontroltheownershipinterestsofareportingcompanywhoseownership
interestsareheldintrust,itmaybenecessarytoconsiderwhetheranyownersof,
orindividualsemployedorengagedby,thecorporatetrusteeexercisesubstantial
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controloverareportingcompany.Thefactorsfordeterminingsubstantialcontrol
byanindividualconnectedwithacorporatetrusteearethesameasforany
benecialowner.
PleaseseeChapter2.1ofFinCEN’sd,“Whatissubstantial
control?”foradditionalinformationonhowtodeterminewhetheranindividualhas
substantialcontroloverareportingcompany.
[IssuedApril18,2024]
D.17.WhoshouldanentityfullyorpartiallyownedbyanIndianTribereportas
itsbenecialowner(s)?
PbPOPPOTPPQPPTdbPOdPOTTP
Thisinformsthedeterminationonwhethertheentityisareportingcompanythat
mustreportbenecialownershipinformation.
Ingeneral,areportingcompanymustreportasbenecialownersallindividuals
who,directlyorindirectly,exercisesubstantialcontroloverthereportingcompany
(seeQuestionD.2),andanyindividualswhodirectlyorindirectlyownorcontrol
atleast25percentormoreofthereportingcompany’sownershipinterests(see
QuestionD.4).
AnIndianTribeisnotanindividual,andthusshouldnotbereportedasanentity’s
benecialowner,evenifitexercisessubstantialcontroloveranentityorownsor
controls25percentormoreoftheentity’sownershipinterests.However,entities
inwhichTribeshaveownershipinterestsmaystillhavetoreportoneormore
individualsasbenecialownersincertaincircumstances.
EntityIsaTribalGovernmentalAuthority.Anentityisnotareportingcompany—and
thusdoesnotneedtoreportbenecialownershipinformationatall—ifitisa
“governmentalauthority,”meaninganentitythatis(1)establishedunderthelaws
oftheUnitedStates,anIndianTribe,aState,orapoliticalsubdivisionofaState,
orunderaninterstatecompactbetweentwoormoreStates,andthat(2)exercises
governmentalauthorityonbehalfoftheUnitedStatesoranysuchIndianTribe,
State,orpoliticalsubdivision.Thiscategoryincludestriballycharteredcorporations
andstate-charteredTribalentitiesifthosecorporationsorentitiesexercise
governmentalauthorityonaTribe’sbehalf.
Entity’sOwnershipInterestsAreControlledorWhollyOwnedbyaTribalGovernmental
Authority.AsubsidiaryofaTribalgovernmentalauthorityislikewiseexemptfrom
BOIreportingrequirementsifitsownershipinterestsareentirelycontrolledor
whollyownedbytheTribalgovernmentalauthority.SeeQuestionsL.3andL.6
forinformationonthis“subsidiaryexemption.”SeeQuestionC.2andSectionL
RPPdQPTQTPPPT
EntityIsPartiallyOwnedbyaTribe(andIsNotExempt).PPPTdTd
ownedbyanIndianTribeshouldreportasbenecialownersallindividuals
exercisingsubstantialcontroloverit,includingindividualswhoareexercising
substantialcontrolonbehalfofanIndianTribeoritsgovernmentalauthority.The
entityshouldalsoreportanyindividualswhodirectlyorindirectlyownorcontrolat
least25percentormoreofownershipinterestsofthereportingcompany.(However,
ifanyoftheseindividualsownsorcontrolstheseownershipinterestsexclusively
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d
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throughanexemptentityoracombinationofexemptentities,thenthereporting
companymayreportthename(s)oftheexemptentityorentitiesinlieuofthe
individualbenecialowner.SeeQuestionD.12.)
dincludesadditionalinformationonhowto
determineifanindividualqualiesasabenecialownerinChapter2,“Whoisabenecial
ownerofmycompany?”.Thischapterincludesseparatesectionswithmoreinformation
aboutsubstantialcontrolandownershipinterest:Chapter2.1“Whatissubstantialcontrol?”
andChapter2.2“Whatisownershipinterest?”
[UpdatedJuly8,2024]
E.CompanyApplicant
E.1. Whoisacompanyapplicantofareportingcompany?
OnlyreportingcompaniescreatedorregisteredonorafterJanuary1,2024,willneed
toreporttheircompanyapplicants.
Acompanythatmustreportitscompanyapplicantswillhaveonlyuptotwo
individualswhocouldqualifyascompanyapplicants:
Theindividualwhodirectlylesthedocumentthatcreatesorregistersthe
company;and
2. Ifmorethanonepersonisinvolvedintheling,theindividualwhois
primarilyresponsiblefordirectingorcontrollingtheling.
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Thefollowingowchartcanhelpidentifythecompanyapplicant.
Inaddition,Chapter3.2,“Whoisacompanyapplicantofmycompany?”ofFinCEN’s
dincludesadditionalinformationtohelpidentifycompany
applicants.
[IssuedSeptember18,2023]
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E.2. Whichreportingcompaniesarerequiredtoreportcompanyapplicants?
NotallreportingcompanieshavetoreporttheircompanyapplicantstoFinCEN.
AreportingcompanymustreportitscompanyapplicantsdTQTTPTP
• DomesticreportingcompanycreatedintheUnitedStatesonorafterJanuary
1,2024
• ForeignreportingcompanyrstregisteredtodobusinessintheUnitedStates
onorafterJanuary1,2024.
AreportingcompanydoesnothavetoreportitscompanyapplicantsTQTTPTP
• DomesticreportingcompanycreatedintheUnitedStatesbeforeJanuary1,
2024;or
• ForeignreportingcompanyrstregisteredtodobusinessintheUnitedStates
beforeJanuary1,2024.
Belowissummaryofthecompanyapplicantreportingrequirement.Chapter3.1,“Ismy
companyrequiredtoreportitscompanyapplicants?”ofFinCEN’sd
includesadditionalinformation.
[IssuedSeptember18,2023]
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E.3. Ismyaccountantorlawyerconsideredacompanyapplicant?
Anaccountantorlawyercouldbeacompanyapplicant,dependingontheirrolein
lingthedocumentthatcreatesorregistersareportingcompany.Inmanycases,
companyapplicantsmayworkforabusinessformationserviceorlawrm.
Anaccountantorlawyermaybeacompanyapplicantiftheydirectlyledthe
documentthatcreatedorregisteredthereportingcompany.Ifmorethanone
personisinvolvedinthelingofthecreationorregistrationdocument,an
accountantorlawyermaybeacompanyapplicantiftheyareprimarilyresponsible
fordirectingorcontrollingtheling.
Forexample,anattorneyatalawrmthatoersbusinessformationservices
maybeprimarilyresponsibleforoverseeingpreparationandlingofareporting
company’sincorporationdocuments.Aparalegalatthelawrmmaydirectlylethe
incorporationdocumentsattheattorney’srequest.Underthosecircumstances,the
attorneyandtheparalegalarebothcompanyapplicantsforthereportingcompany.
[IssuedSeptember18,2023]
E.4. CanacompanyapplicantberemovedfromaBOIreportifthecompany
applicantnolongerhasarelationshipwiththereportingcompany?
No.AcompanyapplicantmaynotberemovedfromaBOIreportevenifthe
companyapplicantnolongerhasarelationshipwiththereportingcompany.A
reportingcompanycreatedonorafterJanuary1,2024,isrequiredtoreport
companyapplicantinformationinitsinitialBOIreport,butisnotrequiredtolean
updatedBOIreportifinformationaboutacompanyapplicantchanges.
[IssuedNovember16,2023]
E.5. Thecompanyapplicantsofareportingcompanyincludetheindividual
“primarilyresponsiblefordirectingthelingofthecreationorregistration
document.”Whatmakesanindividual“primarilyresponsible”fordirecting
suchaling?
Atmost,twoindividualsneedtobereportedascompanyapplicants:
1. thepersonwhodirectlylesthedocumentwithasecretaryofstateor
similaroce,and
2. ifmorethanonepersonisinvolvedinthelingofthedocument,the
personwhoisprimarilyresponsiblefordirectingorcontrollingtheling.
1PPQdeterminingwhoisacompanyapplicant,itisnotrelevantwho
signsthecreationorregistrationdocument,forexample,asanincorporator.To
determinewhoisprimarilyresponsiblefordirectingorcontrollingthelingofthe
document,considerwhoisresponsibleformakingthedecisionsabouttheling
ofthedocument,suchashowthelingismanaged,whatcontentthedocument
includes,andwhenandwherethelingoccurs.Thefollowingthreescenarios
provideexamples.
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Scenario1:Consideranattorneywhocompletesacompanycreationdocument
usinginformationprovidedbyaclient,andthensendsthedocumenttoacorporate
serviceproviderforlingwithasecretaryofstate.Inthisexample:
• Theattorneyisthecompanyapplicantwhoisprimarilyresponsiblefor
directingorcontrollingthelingbecausetheypreparedthecreation
documentanddirectedthecorporateserviceprovidertoleit.
• Theindividualatthecorporateserviceprovideristhecompanyapplicantwho
directlyledthedocumentwiththesecretaryofstate.
Scenario2:Iftheattorneyinstructsaparalegaltocompletethepreparationofthe
creationdocument,ratherthandoingsothemself,beforedirectingthecorporate
serviceprovidertolethedocument,theoutcomeremainsthesame:theattorney
andtheindividualatthecorporateserviceproviderwholesthedocumentare
companyapplicants.Theparalegalisnotacompanyapplicantbecausetheattorney
playedagreaterrolethantheparalegalinmakingsubstantivedecisionsaboutthe
lingofthedocument.
Scenario3:Iftheclientwhoinitiatedthecompanycreationdirectlyasksthe
corporateserviceprovidertolethedocumenttocreatethecompany,thenthe
clientisprimarilyresponsiblefordirectingorcontrollingtheling,andthe
clientshouldbereportedasacompanyapplicant,alongwiththeindividualatthe
corporateserviceproviderwholesthedocument.
[IssuedJanuary12,2024]
E.6. Isathird-partycourierordeliveryserviceemployeewhoonlydelivers
documentsthatcreateorregisterareportingcompanyacompanyapplicant?
No.Athird-partycourierordeliveryserviceemployeewhoonlydeliversdocuments
toasecretaryofstateorsimilaroceisnotacompanyapplicantprovidedthey
meetonecondition:thethird-partycourier,thedeliveryserviceemployee,andany
deliveryservicethatemploysthemdoesnotplayanyotherroleinthecreationor
registrationofthereportingcompany.
Whenathird-partycourierordeliveryserviceemployeeisusedsolelyfordelivery,
theindividual(e.g.,atabusinessformationserviceorlawrm)whorequestedthe
third-partycourierordeliveryservicetodeliverthedocumentwilltypicallybea
companyapplicant.
UnderFinCEN’sregulations,anindividualwho“directlylesthedocument”
thatcreatesorregistersthereportingcompanyisacompanyapplicant.Third-
partycouriersordeliveryserviceemployeeswhodeliversuchdocumentsfacilitate
thedocuments’ling,butFinCENdoesnotconsiderthemtobethelersof
thedocumentsgiventheironlyconnectiontothecreationorregistrationofthe
reportingcompanyiscourieringthedocuments.
Rather,whenathird-partycourierordeliveryserviceisusedbyarm,the
companyapplicantwho“directlyles”thecreationorregistrationdocumentisthe
individualatthermwhorequeststhatthethird-partycourierordeliveryservice
deliverthedocuments.
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• Forexample,anattorneyatalawrmmaybeinvolvedinthepreparation
ofincorporationdocuments.Theattorneydirectsaparalegaltolethe
documents.Theparalegalmaythenrequestathird-partydeliveryservice
todelivertheincorporationdocumentstothesecretaryofstate’soce.
Theparalegalisthecompanyapplicantwhodirectlylesthedocuments,
eventhoughthethird-partydeliveryservicedeliveredthedocumentson
theparalegal’sbehalf.Theattorneyatthelawrmwhowasinvolvedinthe
preparationoftheincorporationdocumentsandwhodirectedtheparalegalto
lethedocumentswillalsobeacompanyapplicantbecausetheattorneywas
primarilyresponsiblefordirectingorcontrollingthelingofthedocuments.
Incontrast,ifacourierisemployedbyabusinessformationservice,lawrm,
orotherentitythatplaysaroleinthecreationorregistrationofthereporting
company,suchasdraftingtherelevantdocumentsorcompilinginformationtobe
submittedaspartofthedocumentsdelivered,theconclusionisdierent.FinCEN
considerssuchacouriertohavedirectlyledthedocuments—andthustobe
acompanyapplicant—giventhecourier’sgreaterconnection(viathecourier’s
employer)tothecreationorregistrationofthecompany.
• Forexample,amailroomemployeeatalawrmmayphysicallydeliverthe
documentthatcreatesareportingcompanyatthedirectionofanattorneyat
thelawrmwhoisprimarilyresponsiblefordecisionsrelatedtotheling.
Bothindividualsarecompanyapplicants.
[IssuedJanuary12,2024]
E.7. Ifanindividualusedanautomatedincorporationservice,suchasthrough
awebsiteoronlineplatform,tolethecreationorregistrationdocument
forareportingcompany,whoisthecompanyapplicant?
Ifabusinessformationserviceonlyprovidessoftware,onlinetools,orgenerally
applicablewrittenguidancethatareusedtoleacreationorregistration
documentforareportingcompany,andemployeesofthebusinessservicearenot
directlyinvolvedinthelingofthedocument,theemployeesofsuchservices
arenotcompanyapplicants.Forexample,anindividualmayprepareandself-le
documentstocreatetheindividual’sownreportingcompanythroughanautomated
incorporationservice.Inthiscase,thisreportingcompanyreportsonlythat
individualasacompanyapplicant.
[IssuedJanuary12,2024]
F.ReportingRequirements
F.1. Willareportingcompanyneedtoreportanyotherinformationinaddition
toinformationaboutitsbenecialowners?
Yes.Theinformationthatneedstobereported,however,dependsonwhenthe
companywascreatedorregistered.
• IfareportingcompanyiscreatedorregisteredonorafterJanuary1,2024,the
reportingcompanywillneedtoreportinformationaboutitself,itsbenecial
owners,anditscompanyapplicants.
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• IfareportingcompanywascreatedorregisteredJanuary1,2024,
thereportingcompanyonlyneedstoprovideinformationaboutitselfand
itsbenecialowners.Thereportingcompanydoesnotneedtoprovide
informationaboutitscompanyapplicants.
[IssuedMarch24,2023]
F.2. Whatinformationwillareportingcompanyhavetoreportaboutitself?
Areportingcompanywillhavetoreport:
PRP
2. Anytradenames,“doingbusinessas”(d/b/a),or“tradingas”(t/a)names;
3. Thecurrentstreetaddressofitsprincipalplaceofbusinessifthat
addressisintheUnitedStates(forexample,aU.S.reportingcompany’s
headquarters),or,forreportingcompanieswhoseprincipalplaceof
businessisoutsidetheUnitedStates,thecurrentaddressfromwhichthe
companyconductsbusinessintheUnitedStates(forexample,aforeign
reportingcompany’sU.S.headquarters);
4. Itsjurisdictionofformationorregistration;and
5. ItsTaxpayerIdenticationNumber(or,ifaforeignreportingcompany
hasnotbeenissuedaTIN,ataxidenticationnumberissuedbyaforeign
jurisdictionandthenameofthejurisdiction).
Areportingcompanywillalsohavetoindicatewhetheritislinganinitialreport,
oracorrectionoranupdateofapriorreport.
dincludesachecklisttohelpidentifytheinformation
requiredtobereported(seeChapter4.1,“WhatinformationshouldIcollectaboutmy
company,itsbenecialowners,anditscompanyapplicants?”).
[IssuedSeptember18,2023]
F.3. Whatinformationwillareportingcompanyhavetoreportaboutits
benecialowners?
Foreachindividualwhoisabenecialowner,areportingcompanywillhavetoprovide:
Theindividual’sname;
2. PQT
3. PTOPTOOPO
4. Anidentifyingnumberfromanacceptableidenticationdocumentsuch
asapassportorU.S.driver’slicense,andthenameoftheissuingstate
orjurisdictionofidenticationdocument(forexamplesofacceptable
identication,seeQuestionF.5).
Thereportingcompanywillalsohavetoreportanimageoftheidentication
documentusedtoobtaintheidentifyingnumberinitem4.
dincludesachecklisttohelpidentifytheinformation
requiredtobereported(seeChapter4.1,“WhatinformationshouldIcollectaboutmy
company,itsbenecialowners,anditscompanyapplicants?”).
[IssuedSeptember18,2023]
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F.4. Whatinformationwillareportingcompanyhavetoreportaboutits
companyapplicants?
Foreachindividualwhoisacompanyapplicant,areportingcompanywillhavetoprovide:
Theindividual’sname;
2. PQT
3. OOPO
4. Anidentifyingnumberfromanacceptableidenticationdocumentsuch
asapassportorU.S.driver’slicense,andthenameoftheissuingstate
orjurisdictionofidenticationdocument(forexamplesofacceptable
identication,seeQuestionF.5).
Thereportingcompanywillalsohavetoreportanimageoftheidentication
documentusedtoobtaintheidentifyingnumberinitem4.
Ifthecompanyapplicantworksincorporateformation—forexample,asan
attorneyorcorporateformationagent—thenthereportingcompanymustreport
thecompanyapplicant’sbusinessaddress.Otherwise,thereportingcompanymust
reportthecompanyapplicant’sresidentialaddress.
dincludesachecklisttohelpidentifytheinformation
requiredtobereported(seeChapter4.1,“WhatinformationshouldIcollectaboutmy
company,itsbenecialowners,anditscompanyapplicants?”).
[IssuedSeptember18,2023]
F.5. Whatareacceptableformsofidenticationthatwillmeetthereporting
requirement?
TheCorporateTransparencyAct(CTA)requiresauniqueidenticationnumber
foundinoneofthefollowingacceptableformsofidenticationforindividuals:
Anon-expiredU.S.driver’slicense(includinganydriver’slicenseissuedbya
commonwealth,territory,orpossessionoftheUnitedStates);
2. Anon-expiredidenticationdocumentissuedbyaU.S.stateorlocal
government,orIndianTribe;
3. Anon-expiredpassportissuedbytheU.S.government;or
4. Anon-expiredpassportissuedbyaforeigngovernment(permitted
onlywhenanindividualdoesnothaveoneoftheotherthreeformsof
identicationlistedabove).
[UpdatedJune10,2024]
F.6. Istherearequirementtoannuallyreportbenecialownershipinformation?
No.Thereisnoannualreportingrequirement.Reportingcompaniesmustlean
initialBOIreportandupdatedorcorrectedBOIreportsasneeded.
dincludesmoreinformationaboutwhentole
initialBOIreportsinChapter5.1,“WhenshouldmycompanyleitsinitialBOIreport?”and
whentoleupdatedandcorrectedBOIreportsinChapter6,“Whatiftherearechangestoor
inaccuraciesinreportedinformation?”
[IssuedNovember16,2023]
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F.7. Doesareportingcompanyhavetoreportinformationaboutitsparentor
subsidiarycompanies?
No,thoughifaspecialreportingruleapplies,thereportingcompanymayreporta
parentcompany’snameinsteadofbenecialownershipinformation.Areporting
companyusuallymustreportinformationaboutitself,itsbenecialowners,and,for
reportingcompaniescreatedorregisteredonorafterJanuary1,2024,itscompany
applicants.However,underaspecialreportingrule,areportingcompanymay
reportaparentcompany’snameinlieuofinformationaboutitsbenecialowners
ifitsbenecialownersonlyholdtheirownershipinterestinthereportingcompany
throughtheparentcompanyandtheparentcompanyisanexemptentity.
Chapter4ofFinCEN’sd(“Whatspecicinformationdoesmy
companyneedtoreport?”)providesadditionalinformationonwhatmustbereportedto
FinCEN.Chapter4.2(“WhatdoIreportifaspecialreportingruleappliestomycompany?”)
specicallyprovidesdetailsonwhatinformationmustbereportedpursuanttospecial
reportingrules.
[IssuedDecember12,2023]
F.8. CanareportingcompanyreportaP.O.boxasitscurrentaddress?
No.ThereportingcompanyaddressmustbeaU.S.streetaddressandcannotbea
;:
dincludesadditionalinformationonwhatmustbe
reportedinChapter4,“Whatspecicinformationdoesmycompanyneedtoreport?”
[IssuedDecember12,2023]
F.9. HaveImetFinCEN’sBOIreportingobligationifIledaformorreportthat
providesbenecialownershipinformationtoastateoce,anancial
institution,ortheIRS?
No.Reportingcompaniesmustreportbenecialownershipinformationdirectly
toFinCEN.Congressenactedalaw,theCorporateTransparencyAct,thatrequires
thereportingofbenecialownershipinformationdirectlytoFinCEN.Stateorlocal
governments,nancialinstitutions,andotherfederalagencies,suchastheIRS,
mayseparatelyrequireentitiestoreportcertainbenecialownershipinformation.
However,bylaw,thoserequirementsarenotasubstituteforreportingbenecial
ownershipinformationtoFinCEN.
[IssuedDecember12,2023]
F.10. Ifabenecialownerorcompanyapplicant’sacceptableidentication
documentdoesnotincludeaphotographforreligiousreasons,willFinCEN
accepttheidenticationdocumentwithoutthephotograph?
Yes.Ifabenecialownerorcompanyapplicant’sidenticationdocumentdoesnot
includeaphotographforreligiousreasons,thereportingcompanymaynonetheless
submitanimageofthatidenticationdocumentwhensubmittingitsreport,as
longastheidenticationdocumentisoneofthetypesofidenticationaccepted
byFinCEN,suchasanon-expiredState-issuedidenticationdocument.Pleasesee
QuestionF.5foralistofacceptableidenticationdocuments.
[IssuedJanuary12,2024]
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F.11. Whatresidentialaddressshouldbereportedifareportingcompanyis
requiredtoareportanindividual’sresidentialaddress,butthatan
individualdoesnothaveapermanentresidentialresidence?
Theresidentialaddressthatiscurrentatthetimeoflingshouldbereportedto
FinCEN.Anupdatedreportshouldbesubmittedwithin30calendardaysifthe
address,oranyotherinformationpreviouslyreported,changes.
dincludesadditionalinformationonwhat
informationmustbereportedinChapter4,“Whatspecicinformationdoesmycompany
needtoreport?”andwhattodowhenpreviouslyreportedinformationneedstobeupdated
inChapter6.1“WhatshouldIdoifpreviouslyreportedinformationchanges?”
[IssuedJanuary12,2024]
F.12. Whataddressshouldareportingcompanyreportifitlacksaprincipalplace
ofbusinessintheUnitedStates?
IfareportingcompanydoesnothaveaprincipalplaceofbusinessintheUnited
States,thenthecompanymustreporttoFinCENasitsaddresstheprimarylocation
intheUnitedStateswhereitconductsbusiness.
IfareportingcompanyhasnoprincipalplaceofbusinessintheUnitedStatesand
conductsbusinessatmorethanonelocationwithintheUnitedStates,thenthe
reportingcompanymayreportasitsprimarylocationtheaddressofanyofthose
locationswherethereportingcompanyreceivesimportantcorrespondence.
IfareportingcompanyhasnoprincipalplaceofbusinessintheUnitedStatesand
doesnotconductbusinessfunctionsatanylocationintheUnitedStates,thenits
primarylocationistheaddressintheUnitedStatesofthepersonthatthereporting
company,underStateorotherapplicablelaw,hasdesignatedtoacceptserviceoflegal
processonitsbehalf.Insomejurisdictions,thispersonisreferredtoasthereporting
company’sregisteredagent,ortheaddressisreferredtoastheregisteredoce.Such
areportingcompanyshouldreportthisaddresstoFinCENasitsaddress.
[IssuedApril18,2024]
F.13. Whattypeoftaxidenticationnumbershouldbereportedbyareporting
companythatisdisregardedforU.S.taxpurposes?
AnentitythatisdisregardedforU.S.taxpurposes—a“disregardedentity”—is
nottreatedasanentityseparatefromitsownerforU.S.taxpurposes.Insteadof
adisregardedentitybeingtaxedseparately,theentity’sownerreportstheentity’s
incomeanddeductionsaspartoftheowner’sfederaltaxreturn.
Adisregardedentitymustreportbenecialownershipinformation(BOI)toFinCEN
ifitisareportingcompany(seeQuestionC.1).Suchareportingcompanymust
provideoneofthefollowingtypesoftaxpayeridenticationnumbers(TINs)onits
BOIreportifithasbeenissuedaTIN:anEmployerIdenticationNumber(EIN);
aSocialSecurityNumber(SSN);oranIndividualTaxpayerIdenticationNumber
(ITIN).IfaforeignreportingcompanyhasnotbeenissuedaTIN,itmustprovide
ataxidenticationnumberissuedbyaforeignjurisdictionandthenameofthat
jurisdiction.
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ConsistentwithrulesoftheInternalRevenueService(IRS)regardingtheuseof
TINs,dierenttypesoftaxidenticationnumbersmaybereportedfordisregarded
entitiesunderdierentcircumstances:
• IfthedisregardedentityhasitsownEIN,itmayreportthatEINasitsTIN.
IfthedisregardedentitydoesnothaveanEIN,itisnotrequiredtoobtain
onetomeetitsBOIreportingrequirementssolongasitcaninsteadprovide
anothertypeofTINor,ifaforeignreportingcompanynotissuedaTIN,atax
identicationnumberissuedbyaforeignjurisdictionandthenameofthat
jurisdiction.
• Ifthedisregardedentityisasingle-memberlimitedliabilitycompany(LLC)
orotherwisehasonlyoneownerthatisanindividualwithanSSNorITIN,
thedisregardedentitymayreportthatindividual’sSSNorITINasitsTIN.
• IfthedisregardedentityisownedbyaU.S.entitythathasanEIN,the
disregardedentitymayreportthatotherentity’sEINasitsTIN.
• Ifthedisregardedentityisownedbyanotherdisregardedentityorachain
ofdisregardedentities,thedisregardedentitymayreporttheTINoftherst
ownerupthechainofdisregardedentitiesthathasaTINasitsTIN.
Asexplainedabove,adisregardedentitythatisareportingcompanymustreport
oneofthesetaxidenticationnumberswhenreportingbenecialownership
informationtoFinCEN.
[IssuedJuly24,2024]
G.InitialReport
G.1. WhendoIhavetoleaninitialbenecialownershipinformationreport
withFinCEN?
IfyourcompanyexistedbeforeJanuary1,2024,itmustleitsinitialbenecial
ownershipinformationreportbyJanuary1,2025.
IfyourcompanywascreatedorregisteredonorafterJanuary1,2024,andbefore
January1,2025,thenitmustleitsinitialbenecialownershipinformationreport
within90calendardaysafterreceivingactualorpublicnoticethatitscreationor
registrationiseective.Specically,this90-calendardaydeadlinerunsfromthe
timethecompanyreceivesactualnoticethatitscreationorregistrationiseective,
orafterasecretaryofstateorsimilarocerstprovidespublicnoticeofits
creationorregistration,whicheverisearlier.
IfyourcompanywascreatedorregisteredonorafterJanuary1,2025,itmustle
itsinitialbenecialownershipinformationreportwithin30calendardaysafter
receivingactualorpublicnoticethatitscreationorregistrationiseective.The
QbTRPPTTTPTPTP
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Chapter5.1“WhenshouldmycompanyleitsinitialBOIreport?”ofFinCEN’sd
hasadditionalinformationaboutthereportingtimelines.
[UpdatedDecember1,2023]
G.2. CanaparentcompanyleasingleBOIreportonbehalfofitsgroup
ofcompanies?
No.Anycompanythatmeetsthedenitionofareportingcompanyandisnot
exemptisrequiredtoleitsownBOIreport.
[IssuedSeptember29,2023]
G.3. HowcanIobtainataxidenticationnumberforanewcompanyquicklyso
thatIcanleaninitialbenecialownershipinformationreportontime?
Areportingcompanymustprovideoneofthefollowingtypesoftaxpayer
identicationnumbers(TINs)onitsBOIreportifithasbeenissuedaTIN:an
EmployerIdenticationNumber(EIN);aSocialSecurityNumber(SSN);oran
IndividualTaxpayerIdenticationNumber(ITIN).Ifaforeignreportingcompanyhas
notbeenissuedaTIN,itmustprovideataxidenticationnumberissuedbyaforeign
jurisdictionandthenameofthatjurisdiction.
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TheInternalRevenueService(IRS)oersafreeonlineapplicationforanEIN,whichis
providedimmediatelyuponsubmissionoftheapplication.Formoreinformation,see
“TaxpayerIdenticationNumbers(TIN)”atIRS.gov(https://www.irs.gov/individuals/
international-taxpayers/taxpayer-identication-numbers-tin).
FormoreinformationonEmployerIdenticationNumbersspecically,andtoaccess
theEINonlineapplication,see“ApplyforanEmployerIdenticationNumber(EIN)
Online”atIRS.gov(https://www.irs.gov/businesses/small-businesses-self-employed/
apply-for-an-employer-identication-number-ein-online).
MostreportingcompaniesshouldbeabletousetheEINonlineapplicationtoapply
fortheirEIN.However,theremaybesituationswhereareportingcompanyneedsto
leaFormSS-4,ApplicationforEmployerIdenticationNumber(https://www.irs.
gov/pub/irs-pdf/fss4.pdf),inordertoobtainanEIN.Inparticular,iftheresponsible
partyfortheapplicantisaforeignpersonthatdoesnothaveanSSNorITIN,theywill
notbeabletousetheonlineapplicationportal.Forinformationaboutcompleting
andsubmittingtheFormSS-4bymailorfax,seetheInstructionstoFormSS-4
(https://www.irs.gov/instructions/iss4).
ForFormsSS-4submittedbyfax,applicantsshouldgenerallyreceivetheirEINinfour
businessdays.ForFormsSS-4submittedbymail,applicantsshouldreceivetheirEIN
infourtoveweeks.However,insomecircumstances,itmaytakesixtoeightweeks
toreceiveanEIN.Thus,insomelimitedcircumstances,areportingcompanywith
noothertaxidenticationnumbermaynotbeabletoobtainitsEINbyitsBOIreport
lingdeadline.
Areportingcompanymustreportitstaxidenticationnumberwhenreporting
benecialownershipinformationtoFinCENand,indeed,willbeunabletosubmit
itsBOIreportwithoutincludingataxidenticationnumber.Insuchcircumstances,
inadditiontomakingallreasonableeortstoleitsBOIreportinatimelymanner
(includingrequestingallnecessaryinformationasearlyaspracticable),thereporting
companyshouldleitsreportassoonasitreceivesitsEIN.Asabestpractice,the
reportingcompanymayconsiderretainingdocumentationassociatedwithitseorts
tocomplywiththeBOIreportingrequirementsinatimelymanner.
[UpdatedJuly24,2024]
G.4. ShouldaninitialBOIreportincludehistoricalbenecialownersofa
reportingcompany,oronlybenecialownersasofthetimeofling?
AninitialBOIreportshouldonlyincludethebenecialownersasofthetimeofthe
ling.ReportingcompaniesshouldnotifyFinCENofchangestobenecialowners
OPPO-:ROPOP
dincludesmoreinformationaboutwhentole
updatedorcorrectedBOIreportsinChapter6,“Whatiftherearechangestoorinaccuracies
inreportedinformation?”
[IssuedNovember16,2023]
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G.5. HowdoesacompanycreatedorregisteredafterJanuary1,2024,determine
itsdateofcreationorregistration?
Thedateofcreationorregistrationforareportingcompanyistheearlierofthe
dateonwhich:(1)thereportingcompanyreceivesactualnoticethatitscreation
(orregistration)hasbecomeeective;or(2)asecretaryofstateorsimilaroce
rstprovidespublicnotice,suchasthroughapubliclyaccessibleregistry,thatthe
domesticreportingcompanyhasbeencreatedortheforeignreportingcompany
PPPRTPPO
FinCENrecognizesthattherearevaryingstatelingpractices.Incertainstates,
automatedsystemsprovidenoticeofcreationorregistrationtonewlycreatedor
registeredcompanies.Inotherstates,noactualnoticeofcreationorregistration
isprovided,andnewlycreatedcompaniesreceivenoticethroughthepublic
postingofstaterecords.FinCENbelievesthatindividualswhocreateorregister
reportingcompanieswilllikelystayapprisedofcreationorregistrationnotices
orpublications,giventhoseindividuals’interestinestablishinganoperating
businessorengagingintheactivityforwhichthereportingcompanyiscreated.
[IssuedDecember12,2023]
G.6. AcompanythatwascreatedorregisteredbeforeJanuary1,2024,andwas
exemptfromtheBOIreportingrequirementslosesitsexemptstatus
betweenJanuary1,2024,andJanuary1,2025.Howlongdoesthereporting
companyhavetoleitsinitialBOIreport?
Normally,acompanythatlosesitsexemptstatusmustleaBOIreportwithFinCEN
within30calendardaysafterthedatethatitnolongermeetsthecriteriaforany
exemption.AreportingcompanycreatedorregisteredtodobusinessbeforeJanuary
1,2024,however,hasuntilJanuary1,2025,toleitsinitialBOIreport.
FinCENhasdeterminedthatpreviouslyexemptentitiesthatexistedbefore2024and
losetheirexemptstatusin2024willreceivethebenetofwhicheverofthesetwo
timeframesislonger:(1)theremainingdaysleftintheone-yearlingperiodfor
existingcompanies;or(2)the30-calendar-dayperiodforcompaniesthatlosetheir
PP
Thus,forexample,ifanexistingreportingcompanyceasestobeexempton
February1,2024,thecompanywillhaveuntilJanuary1,2025,toleitsinitialBOI
report.IfthecompanyceasestobeexemptonDecember15,2024,thecompanywill
haveuntilJanuary14,2025,toleitsinitialBOIreport.
[IssuedApril18,2024]
H.UpdatedReport
H.1. WhatshouldIdoifpreviouslyreportedinformationchanges?
QPPTtotherequiredinformationaboutyourcompanyoritsbenecial
ownersinabenecialownershipinformationreportthatyourcompanyled,your
companymustleanupdatedreportnolaterthan30daysafterthedateofthechange.
Areportingcompanyisnotrequiredtoleanupdatedreportforanychangesto
previouslyreportedinformationaboutacompanyapplicant.
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Thefollowinginfographicsetsoutupdatedreportstimelines
Chapter6.1,“WhatshouldIdoifpreviouslyreportedinformationchanges?”ofFinCEN’s
dprovidesadditionalinformation.
[IssuedSeptember18,2023]
H.2. Whataresomelikelytriggersforneedingtoupdateabenecialownership
informationreport?
Thefollowingaresomeexamplesofthechangesthatwouldrequireanupdated
benecialownershipinformationreport:
• Anychangetotheinformationreportedforthereportingcompany,suchas
PRTPTRPbTPP
• Achangeinbenecialowners,suchasanewCEO,orasalethatchangeswho
meetstheownershipinterestthresholdof25percent(seeQuestionD.4for
moreinformationaboutownershipinterests).
• Anychangetoabenecialowner’sname,address,oruniqueidentifying
numberpreviouslyprovidedtoFinCEN.Ifabenecialownerobtainedanew
driver’slicenseorotheridentifyingdocumentthatincludesachangedname,
address,oridentifyingnumber,thereportingcompanyalsowouldhavetole
anupdatedbenecialownershipinformationreportwithFinCEN,including
animageofthenewidentifyingdocument.
dprovidesadditionalguidanceontriggersrequiring
anupdatedbenecialownershipinformationreport(seeChapter6.1“WhatshouldIdoif
previouslyreportedinformationchanges?”).
[IssuedSeptember18,2023]
H.3. IsanupdatedBOIreportrequiredwhenthetypeofownershipinteresta
benecialownerhasinareportingcompanychanges?
No.Achangetothetypeofownershipinterestabenecialownerhasinareporting
company—forexample,aconversionofpreferredsharestocommonstock—does
notrequirethereportingcompanytoleanupdatedBOIreportbecauseFinCEN
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doesnotrequirecompaniestoreportthetypeofinterest.UpdatedBOIreportsare
requiredwheninformationreportedtoFinCENaboutthereportingcompanyorits
benecialownerschanges.
dincludesadditionalinformationonwhenandhow
reportingcompaniesmustupdateinformationinChapter6,“Whatiftherearechangestoor
inaccuraciesinreportedinformation?”
[IssuedDecember12,2023]
H.4. IfareportingcompanyneedstoupdateonepieceofinformationonaBOI
report,suchasitslegalname,doesthereportingcompanyhavetollout
anentirenewBOIreport?
UpdatedBOIreportswillrequirealleldstobesubmitted,includingtheupdated
piecesofinformation.Forexample,ifareportingcompanychangesitslegalname,
thereportingcompanywillneedtoleanupdatedBOIreporttoincludethenew
legalnameandthepreviouslyreported,unchangedinformationaboutthecompany,
itsbenecialowners,and,ifrequired,itscompanyapplicants.
AreportingcompanythatleditspriorBOIreportusingthellablePDFversion
mayupdateitssavedcopyandresubmittoFinCEN.Ifareportingcompanyused
FinCEN’sweb-basedapplicationtosubmitthepreviousBOIreport,itwillneed
tosubmitanewreportinitsentiretybyeitheraccessingFinCEN’sweb-based
applicationtocompleteandletheBOIreport,orbyusingthePDFoptionto
completetheBOIreportanduploadtotheBOIe-Filingapplication.
[IssuedDecember12,2023]
H.5. CanalersubmitalateupdatedBOIreport?
AnupdatedBOIreportcanbesubmittedtoFinCENatanytime.However,the
reportingcompanyisresponsibleforensuringthatupdatesareledwithin30days
ofachangeoccurring.Ifareportingcompanyhasengagedathird-partyservice
providertoleBOIreportsandupdatesonitsbehalf,thenitshouldcommunicate
anychangestoitsbenecialownershipinformationtothethird-partyservice
providerwithenoughtimetomeetthe30-daydeadline.
[IssuedDecember12,2023]
H.6. Ifareportingcompanylastleda“newlyexemptentity”BOIreportbut
subsequentlylosesitsexemptstatus,whatshoulditdo?
AreportingcompanyshouldleanupdatedBOIreportwithFinCENwiththe
company’scurrentbenecialownershipinformationwhenitdeterminesitnolonger
qualiesforanexemption.
[IssuedDecember12,2023]
I.CorrectedReport
I.1. WhatshouldIdoifIlearnofaninaccuracyinareport?
Ifabenecialownershipinformationreportisinaccurate,yourcompanymust
correctitnolaterthan30daysafterthedateyourcompanybecameawareofthe
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inaccuracyorhadreasontoknowofit.Thisincludesanyinaccuracyintherequired
informationprovidedaboutyourcompany,itsbenecialowners,oritscompany
applicants.Thefollowinginfographicsetsoutthecorrectedreporttimelines
Chapter6.2,“WhatshouldIdoifIlearnofaninaccuracyinareport?”ofFinCEN’s
dincludesadditionalinformationaboutcorrectinginaccurate
benecialownershipinformationreportsledwithFinCEN.
[UpdatedSeptember29,2023]
J.NewlyExemptEntityReport
J.1. Whatshouldareportingcompanydoifitbecomesexemptafteralready
lingareport?
Ifareportingcompanyledabenecialownershipinformationreportbutthen
becomesexemptfromlingthereport,thecompanyshouldleanupdatedreport
indicatingthatitisnolongerareportingcompany.AnupdatedBOIreportfora
newlyexemptentitywillonlyrequirethat:(1)theentityidentifyitself;and(2)
checkaboxnotingitsnewlyexemptstatus.
Chapter6.3,“Whatshouldmycompanydoifitbecomesexemptafteralreadylinga
report?”ofFinCEN’sdincludesmoreinformation.
[IssuedSeptember18,2023]
K.Compliance/Enforcement
K.1. Whathappensifareportingcompanydoesnotreportbenecialownership
informationtoFinCENorfailstoupdateorcorrecttheinformationwithin
therequiredtimeframe?
FinCENisworkinghardtoensurethatreportingcompaniesareawareoftheir
obligationstoreport,update,andcorrectbenecialownershipinformation.FinCEN
understandsthisisanewrequirement.Ifyoucorrectamistakeoromissionwithin
90daysofthedeadlinefortheoriginalreport,youmayavoidbeingpenalized.
However,youcouldfacecivilandcriminalpenaltiesifyoudisregardyourbenecial
bPTTQTPTRTRT
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dprovidesmoreinformationaboutenforcementof
therequirement(seeChapter1.3,“WhathappensifmycompanydoesnotreportBOIinthe
requiredtimeframe?”).
[IssuedSeptember18,2023]
K.2. WhatpenaltiesdoindividualsfaceforviolatingBOIreportingrequirements?
AsspeciedintheCorporateTransparencyAct,apersonwhowillfullyviolatestheBOI
reportingrequirementsmaybesubjecttocivilpenaltiesofupto$500foreachday
thattheviolationcontinues.However,thiscivilpenaltyamountisadjustedannually
forination.AsofthetimeofpublicationofthisFAQ,thisamountis$591.
ApersonwhowillfullyviolatestheBOIreportingrequirementsmayalsobesubject
tocriminalpenaltiesofuptotwoyearsimprisonmentandaneofupto$10,000.
Potentialviolationsincludewillfullyfailingtoleabenecialownershipinformation
report,willfullylingfalsebenecialownershipinformation,orwillfullyfailingto
correctorupdatepreviouslyreportedbenecialownershipinformation.
[UpdatedApril18,2024]
K.3. WhocanbeheldliableforviolatingBOIreportingrequirements?
Bothindividualsandcorporateentitiescanbeheldliableforwillfulviolations.
Thiscanincludenotonlyanindividualwhoactuallyles(orattemptstole)false
informationwithFinCEN,butalsoanyonewhowillfullyprovidesthelerwithfalse
informationtoreport.Bothindividualsandcorporateentitiesmayalsobeliablefor
willfullyfailingtoreportcompleteorupdatedbenecialownershipinformation;in
suchcircumstances,individualscanbeheldliableiftheyeithercausethefailureor
areasenioroceratthecompanyatthetimeofthefailure.
i. Cananindividualwholesareportonbehalfofareportingcompanybe
heldliable?
Yes.Anindividualwhowillfullylesafalseorfraudulentbenecialownership
informationreportonacompany’sbehalfmaybesubjecttothesameciviland
criminalpenaltiesasthereportingcompanyanditsseniorocers.
ii. Canabenecialownerorcompanyapplicantbeheldliableforrefusingto
providerequiredinformationtoareportingcompany?
Yes.Asdescribedabove,anenforcementactioncanbebroughtagainstan
individualwhowillfullycausesareportingcompany’sfailuretosubmit
completeorupdatedbenecialownershipinformationtoFinCEN.This
wouldincludeabenecialownerorcompanyapplicantwhowillfullyfailsto
providerequiredinformationtoareportingcompany.
[IssuedDecember12,2023]
K.4. Isareportingcompanyresponsibleforensuringtheaccuracyofthe
informationthatitreportstoFinCEN,evenifthereportingcompany
obtainsthatinformationfromanotherparty?
Yes.Itistheresponsibilityofthereportingcompanytoidentifyitsbenecial
ownersandcompanyapplicants,andtoreportthoseindividualstoFinCEN.Atthe
timethelingismade,eachreportingcompanyisrequiredtocertifythatitsreport
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orapplicationistrue,correct,andcomplete.Accordingly,FinCENexpectsthat
reportingcompanieswilltakecaretoverifytheinformationtheyreceivefromtheir
benecialownersandcompanyapplicantsbeforereportingittoFinCEN.
[IssuedDecember12,2023]
K.5. Whatshouldareportingcompanydoifabenecialownerorcompany
applicantwithholdsinformation?
WhileFinCENrecognizesthatmuchoftheinformationrequiredtobereportedabout
benecialownersandcompanyapplicantswillbeprovidedtoreportingcompanies
bythoseindividuals,reportingcompaniesareresponsibleforensuringthatthey
submitcompleteandaccuratebenecialownershipinformationtoFinCEN.Starting
January1,2024,reportingcompanieswillhavealegalrequirementtoreport
benecialownershipinformationtoFinCEN.
Existingreportingcompaniesshouldengagewiththeirbenecialownerstoadvise
themofthisrequirement,obtainrequiredinformation,andreviseorconsider
puttinginplacemechanismstoensurethatbenecialownerswillkeepreporting
companiesapprisedofchangesinreportedinformation,ifnecessary.Benecial
ownersandcompanyapplicantsshouldalsobeawarethattheymayfacepenalties
iftheywillfullycauseareportingcompanytofailtoreportcompleteorupdated
benecialownershipinformation.
Personsconsideringcreatingorregisteringlegalentitiesthatwillbereporting
companiesshouldtakestepstoensurethattheyhaveaccesstothebenecial
ownershipinformationrequiredtobereportedtoFinCEN,andthattheyhave
mechanismsinplacetoensurethatthereportingcompanyiskeptapprisedof
changesinthatinformation.
[IssuedDecember12,2023]
L.ReportingCompanyExemptions
L.1. Whatarethecriteriaforthetax-exemptentityexemptionfromthe
benecialownershipinformationreportingrequirement?
Anentityqualiesforthetax-exemptentityexemptionifanyQPQbTRQ
criteriaapply:
(1) Theentityisanorganizationthatisdescribedinsection501(c)oftheP
RevenueCodeof1986(Code)(determinedwithoutregardtosection508(a)of
PCode)andexemptfromtaxundersection501(a)oftheCode
(2) Theentityisanorganizationthatisdescribedinsection501(c)oftheCode,
andwasexemptfromtaxundersection501(a)oftheCode,butlostitstax-
exemptstatuslessthan180daysago.
(3) Theentityisapoliticalorganization,asdenedinsection527(e)(1)ofthe
Code,thatisexemptfromtaxundersection527(a)oftheCode
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(1) Theentityisanorganizationthatisdescribedinsection501(c)oftheP
RevenueCodeof1986(Code)(determinedwithoutregardtosection508(a)of
PCode)andexemptfromtaxundersection501(a)oftheCode
(4) Theentityisatrustdescribedinparagraph(1)or(2)ofsection4947(a)oftheCode
dincludeschecklistsforthisexemption(see
exemption#19)andfortheadditionalexemptionstothereportingrequirements(see
Chapter1.2,“Ismycompanyexemptfromthereportingrequirements?”).
[IssuedSeptember18,2023]
L.2. Whatarethecriteriafortheinactiveentityexemptionfromthebenecial
ownershipinformationreportingrequirement?
AnentityqualiesfortheinactiveentityexemptionifallsixQPQbTR
criteriaapply:
(1) TheentitywasinexistenceonorbeforeJanuary1,2020.
(2) Theentityisnotengagedinactivebusiness.
(3) Theentityisnotownedbya,whetherdirectlyorindirectly,
whollyorpartially.“Foreignperson”meansapersonwhoisnotaUnited
Statesperson.AUnitedStatespersonisdenedinsection7701(a)(30)ofthe
InternalRevenueCodeof1986asacitizenorresidentoftheUnitedStates,
domesticpartnershipandcorporation,andotherestatesandtrusts.
(4) Theentityhasnotexperiencedanychangeinownershipinthepreceding
twelve-monthperiod.
(5) Theentityhasnotsentorreceivedanyfundsinanamountgreaterthan$1,000,
eitherdirectlyorthroughanynancialaccountinwhichtheentityorany
aliateoftheentityhadaninterest,intheprecedingtwelve-monthperiod.
(6) Theentitydoesnototherwiseholdanykindortypeofassets,whetherinthe
UnitedStatesorabroad,includinganyownershipinterestinanycorporation,
limitedliabilitycompany,orothersimilarentity.
dincludeschecklistsforthisexemption(see
exemption#23)andfortheadditionalexemptionstothereportingrequirements(see
Chapter1.2,“Ismycompanyexemptfromthereportingrequirements?”).
[IssuedSeptember18,2023]
L.3. Whatarethecriteriaforthesubsidiaryexemptionfromthebenecial
ownershipinformationreportingrequirement?
Subsidiariesofcertaintypesofentitiesthatareexemptfromthebenecial
bPTTQTPTRPTPPdPPPQP
PTRPTPP
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Anentityqualiesforthesubsidiaryexemptionifthefollowingapplies:
Theentity’sownershipinterestsarecontrolledorwhollyowned,directlyor
indirectly,byanyQPPdPQPPPTTP
• Securitiesreportingissuer;
• Governmentalauthority;
• -
• Creditunion;
• Depositoryinstitutionholdingcompany;
• Brokerordealerinsecurities;
• Securitiesexchangeorclearingagency;
• OtherExchangeActregisteredentity;
• Investmentcompanyorinvestmentadviser;
• Venturecapitalfundadviser;
• Insurancecompany;
• State-licensedinsuranceproducer;
• CommodityExchangeActregisteredentity;
• Accountingrm;
• Publicutility;
• Financialmarketutility;
• PPPTd
• Largeoperatingcompany.
dincludesdenitionsoftheexemptentitieslisted
aboveandachecklistforthisexemption(seeexemption#22).FinCEN’sGuidealsoincludes
checklistsfortheadditionalexemptionstothereportingrequirements(seeChapter1.2,“Is
mycompanyexemptfromthereportingrequirements?”).
[IssuedSeptember18,2023]
L.4. IfIownagroupofrelatedcompanies,canIconsolidateemployeesacross
thosecompaniestomeetthecriteriaofalargeoperatingcompany
exemptionfromthereportingcompanydenition?
No.Thelargeoperatingcompanyexemptionrequiresthattheentityitselfemploy
morethan20full-timeemployeesintheUnitedStatesanddoesnotpermit
consolidationofthisemployeecountacrossmultipleentities.
dincludesachecklistforthisexemption(see
exemption#21).
[IssuedNovember16,2023]
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L.5. HowdoesacompanyreporttoFinCENthatthecompanyisexempt?
AcompanydoesnotneedtoreporttoFinCENthatitisexemptfromtheBOI
PTRPTPPTQTbdPPPP
IfacompanyledaBOIreportandlaterqualiesforanexemption,thatcompany
shouldleanupdatedBOIreporttoindicatethatitisnewlyexemptfromthe
reportingrequirements.UpdatedBOIreportsareledelectronicallythoughthe
securelingsystem.AnupdatedBOIreportforanewlyexemptentitywillonly
requirethattheentity:(1)identifyitself;and(2)checkaboxnotingitsnewly
PP
[IssuedNovember16,2023]
L.6. Doesasubsidiarywhoseownershipinterestsarepartiallycontrolledbyan
exemptentityqualifyforthesubsidiaryexemption?
No.Ifanexemptentitycontrolssomebutnotalloftheownershipinterestsofthe
subsidiary,thesubsidiarydoesnotqualify.Toqualify,asubsidiary’sownership
TPPPfully,100percentownedorcontrolledbyanexemptentity.
Asubsidiarywhoseownershipinterestsarecontrolledorwhollyowned,directly
orindirectly,bycertainexemptentitiesisexemptfromtheBOIreporting
requirements.Inthiscontext,controlofownershipinterestsmeansthattheexempt
entityentirelycontrolsalloftheownershipinterestsinthereportingcompany,in
thesamewaythatanexemptentitymustwhollyownallofasubsidiary’sownership
TPPQPPPTd
[IssuedJanuary12,2024]
L.7. Ifthesizeofareportingcompanyuctuatesaboveandbelowoneofthe
thresholdsforthelargeoperatingcompanyexemption,doesthereporting
companyneedtoleaBOIreport?
Yes.ThecompanywillneedtoleaBOIreportifitotherwisemeetsthedenition
ofareportingcompanyanddoesnotmeetthecriteriaforthelargeoperating
companyexemption(oranyotherexemption).IfthecompanylesaBOIreport
andthenbecomesexemptasalargeoperatingcompany,thecompanyshould
lea“newlyexemptentity”BOIreportwithFinCENnotingthatthecompany
isnowexempt.Ifatalaterdatethecompanynolongermeetsthecriteriafor
thelargeoperatingcompanyexemptionoranyotherexemption,thereporting
companyshouldleanupdatedBOIreportwithFinCEN.Updatedreportsshouldbe
submittedtoFinCENwithin30calendardaysoftheoccurrenceofthechange.
Toqualifyforthelargeoperatingcompanyexemption,anentitymusthavemore
than20full-timeemployeesintheUnitedStates,musthaveledaFederalincome
taxorinformationreturnintheUnitedStatesinthepreviousyeardemonstrating
morethan$5,000,000ingrossreceiptsorsales,andmusthaveanoperating
presenceataphysicaloceintheUnitedStates.
[IssuedApril18,2024]
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L.8. Aretelecommunicationsservicesincludedinthepublicutilityexemptionto
thereportingrequirements?
FinCEN’sregulationsprovidethatanentitythatisaregulatedpublicutilityas
denedin26U.S.C.7701(a)(33)(A)andthatprovidestelecommunicationsservices,
electricalpower,naturalgas,orwaterandsewerserviceswithintheUnitedStatesis
notrequiredtoreportitsbenecialownershipinformationtoFinCEN.Suchexempt
regulatedpublicutilitiesincludeacorporationengagedinthefurnishingorsale
oftelephoneortelegraphservicesiftheratesforsuchfurnishingorsalemeetthe
requirementsof26U.S.C.7701(a)(33)(A),asspeciedin26U.S.C.7701(a)(33)(D).
[IssuedJune10,2024]
L.9. Doesacompanyqualifyforthelargeoperatingcompanyexemptionifithas
notyetleditsFederalincometaxorinformationreturnforthepreviousyear?
TheCorporateTransparencyAct(CTA)speciesthatacompanymayqualifyforthe
largeoperatingcompanyexemptionbasedonaFederalincometaxorinformation
returnled“in”thepreviousyear,whileFinCEN’sregulationsrefertotaxor
informationreturnsled“for”thepreviousyear.Totheextentataxorinformation
Pthepreviousyearwasnotledthepreviousyear(e.g.,becausea
companyhasnotleditsreturnforthepreviousyearatthetimebenecial
ownershipinformationisrequiredtobereported,orbecausethereturnledinthe
previousyearwasforaprioryear),acompanyshouldusethereturnledP
previousyearforpurposesofdeterminingitsqualicationfortheexemption.Ifa
companyrelyingonthisexemptionsubsequentlylesataxreturndemonstrating
Pthan$5millioningrosssalesorreceipts,anditnolongerqualiesforthelarge
operatingcompanyexemptionoranyotherexemption,ithas30daysfromthedate
ofthetaxreturntoleaninitialBOIreport.TheFederalincometaxorinformation
returnmustdemonstratemorethan$5,000,000ingrossreceiptsorsales,as
reportedasgrossreceiptsorsales(netofreturnsandallowances)ontheentity’s
IRSForm1120,consolidatedIRSForm1120,IRSForm1120-S,IRSForm1065,or
otherapplicableIRSform,excludinggrossreceiptsorsalesfromsourcesoutsidethe
UnitedStates,asdeterminedunderFederalincometaxprinciples.
[IssuedJune10,2024]
M.FinCENIdentier
M.1. WhatisaFinCENidentier?
A“FinCENidentier”isauniqueidentifyingnumberthatFinCENwillissueto
anindividualorreportingcompanyuponrequestaftertheindividualorreporting
companyprovidescertaininformationtoFinCEN.Anindividualorreporting
companymayonlyreceiveoneFinCENidentier.
dincludesadditionalinformationonFinCEN
identiersinChapter4.3,“WhatisaFinCENidentierandhowcanIuseit?”
[IssuedSeptember29,2023]
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M.2. HowcanIuseaFinCENidentier?
WhenabenecialownerorcompanyapplicanthasobtainedaFinCENidentier,
reportingcompaniesmayreporttheFinCENidentierofthatindividualinthe
placeofthatindividual’sotherwiserequiredpersonalinformationonabenecial
bPTTQTP
Areportingcompanymayreportanotherentity’sFinCENidentierandfulllegal
nameinplaceofinformationaboutitsbenecialownerswhenthreeconditionsare
met:(1)theotherentityobtainsaFinCENidentierandprovidesittothereporting
company;(2)thebenecialownersholdinterestsinthereportingcompany
throughownershipinterestsintheotherentity;and(3)thebenecialownersofthe
reportingcompanyandtheotherentityaretheexactsameindividuals.
[UpdatedJanuary12,2024]
M.3. HowdoIrequestaFinCENidentier?
IndividualsmayrequestaFinCENidentierstartingJanuary1,2024,bycompleting
anelectronicwebformathttps://ncenid.ncen.gov.Individualswillneedto
providetheirfulllegalname,dateofbirth,address,uniqueidentifyingnumberand
issuingjurisdictionfromanacceptableidenticationdocument,andanimageof
theidenticationdocument.Afteranindividualsubmitsthisinformation,theywill
immediatelyreceiveauniqueFinCENidentier.
ReportingcompaniesmayrequestaFinCENidentierbycheckingaboxonthe
benecialownershipinformationreportuponsubmission.Afterthereporting
companysubmitsthereport,thecompanywillimmediatelyreceiveaunique
FinCENidentier.IfareportingcompanywishestorequestaFinCENidentierafter
submittingitsinitialbenecialownershipreport,itmaysubmitanupdatedbenecial
ownershipinformationreportrequestingaFinCENidentier,evenifthecompany
OPPbTPPPOOPTTQT
[UpdatedJanuary4,2024]
M.4. AreFinCENidentiersrequired?
No.AnindividualorreportingcompanyisnotrequiredtoobtainaFinCENidentier.
[IssuedSeptember29,2023]
M.5. DoIneedtoupdateorcorrecttheinformationIsubmittedtoobtaina
FinCENidentier?
Yes.IndividualsmustupdateorcorrectinformationthroughtheFinCENidentier
applicationthatisalsousedtorequestaFinCENidentier.
• Individualsmustreportanychangetotheinformationtheysubmittedto
obtainaFinCENidentiernolaterthan30daysafterthedateonwhichthe
changeoccurred.
• Ifthereisanyinaccuracyinthisinformation,anindividualmustcorrectthe
informationnolaterthan30daysafterthedatetheindividualbecameaware
oftheinaccuracyorhadreasontoknowofit.
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ReportingcompanieswithaFinCENidentiermustupdateorcorrectthecompany’s
informationbylinganupdatedorcorrectedbenecialownershipinformation
report,asappropriate.
[IssuedSeptember29,2023]
M.6. Isthereanywaytodeactivateanindividual’sFinCENidentierthatis
nolongerinusesothattheindividualnolongerhastoupdatethe
informationassociatedwithit?
FinCENisactivelyassessingoptionstoallowindividualstodeactivateaFinCEN
identiersothattheydonotneedtoupdatetheunderlyingpersonalinformation
onanongoingbasis.FinCENwillprovideadditionalguidanceonthisfunctionality
uponcompletionofthatprocess.
[IssuedSeptember29,2023]
M.7. WhocanrequestaFinCENidentieronbehalfofanindividual?
AnyoneauthorizedtoactonbehalfofanindividualmayrequestaFinCENidentier
ontheindividual’sbehalfonorafterJanuary1,2024.
FinCENidentiersforindividualsareprovideduponrequestaftertherequesting
partyhassubmittedthenecessaryinformation.ObtainingaFinCENidentierforan
individualrequirestherequestingpartytocreateaLogin.govaccount,whichistied
totheindividualreceivingtheFinCENidentier.IndividualswhoreceiveaFinCEN
identiershouldensuretheirlogincredentials,includingemailaddressandrelated
multi-factorinformationassociatedwiththeirLogin.govaccount,aresavedfor
futurereference.
dincludesadditionalinformationontheFinCEN
identierinChapter4.3“WhatisaFinCENidentierandhowcanIuseit?”
[IssuedDecember12,2023]
N.Third-PartyServiceProviders
N.1. Canathird-partyserviceproviderassistreportingcompaniesby
submittingrequiredinformationtoFinCENontheirbehalf?
Yes.Reportingcompaniesmayusethird-partyserviceproviderstosubmitbenecial
ownershipinformationreports.Third-partyserviceproviderswillhavethe
abilitytosubmitthereportsviaFinCEN’sBOIE-FilingwebsiteoranApplication
ProgrammingInterface(API).TorequesttheAPItechnicalspecications,use
FinCEN’scontactform(https://www.ncen.gov/contact).Pleasedothefollowing
whensubmittingyourinquiry:(1)selectthetopicassociatedwithBenecial
Ownership(BO)/CorporateTransparencyAct(CTA);(2)selectthesubjectassociated
withAPIrequests;(3)inthemessagebody,indicatethenatureofyourAPI-related
inquiry(e.g.,“IwouldliketoreviewtheAPItechnicalspecications,”“Iwouldlike
torequestaccesstotheAPI,”etc.).
[UpdatedJanuary4,2024]
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N.2. Whattypeofevidencewillareportingcompanyreceiveasconrmation
thatitsBOIreporthasbeensuccessfullyledbyathird-partyservice
provider?
TheBOIE-Filingapplication,availablebeginningJanuary1,2024,provides
acknowledgementofsubmissionsuccessorfailure,andthesubmitterwillbeableto
downloadatranscriptoftheBOIreport.Thereportingcompanywillneedtoobtain
thisconrmationfromthethird-partyserviceprovider.
[IssuedDecember12,2023]
N.3. Willathird-partyserviceproviderbeabletosubmitmultipleBOIreportsto
FinCENatthesametime?
Yes.Third-partyserviceproviderswillbeabletosubmitmultipleBOIreports
throughanApplicationProgrammingInterface(API).
[IssuedDecember12,2023]
O.AccesstoBenecialOwnershipInformation
O.1. Whenwillauthorizedrecipientshaveaccesstobenecialownership
information?
FinCENwilltakeaphasedapproachtoprovidingaccesstobenecialownership
TQT
• Therstphase,expectedtobegininthespringof2024,willbeapilotprogram
forahandfulofFederalagencyusers.
• Thesecondphase,expectedinthesummerof2024,willextendaccessto
TreasuryocesandotherFederalagenciesengagedinlawenforcementand
nationalsecurityactivitiesthatalreadyhavememorandaofunderstandingfor
accesstoBankSecrecyActinformation.
• Thethirdphase,expectedinthefallof2024,willextendaccesstoadditional
Federalagenciesengagedinlawenforcement,nationalsecurity,andintelligence
activities,aswellastoState,local,andTriballawenforcementpartners.
• Thefourthphase,expectedinthewinterof2024,willextendaccessto
intermediaryFederalagenciesinconnectionwithforeigngovernmentrequests.
• Thefthphase,expectedinthespringof2025,willextendaccesstonancial
institutionssubjecttocustomerduediligencerequirementsunderapplicable
lawandtheirsupervisors.
FinCENisnotcurrentlyacceptingrequestsforaccesstobenecialownership
information.FinCENwillprovidefurtherguidanceonhowtorequestaccessin
PQP
[IssuedApril18,2024]
O.2. IworkataFederalagency.HowcanIrequestbenecialownership
informationfromFinCEN?
FinCENisauthorizedtodisclosebenecialownershipinformationtoFederal
agenciesengagedinnationalsecurity,intelligence,orlawenforcementactivities
aswellasFederalregulatoryagenciesthatsupervisenancialinstitutionsfor
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compliancewithcustomerduediligencerequirements.Torequestbenecial
ownershipinformationfromFinCEN,suchFederalagencieswillrstneedtoenter
intoamemorandumofunderstandingwithFinCENdescribinghowtheagencywill
protectthesecurityandcondentialityoftheinformation.Additionalinformation
aboutenteringintosuchamemorandumwillbeavailablewhenyouragency
becomeseligibletoobtainaccesstobenecialownershipinformationunderthe
phasedimplementationtimeline(seeQuestionO.1).
Inthemeantime,weencourageagenciesinterestedinaccesstobenecialownership
informationtoreviewtheBenecialOwnershipInformationAccessandSafeguards
Pandbecomefamiliarwiththisrule’srequirementsforagenciesaccessing
benecialownershipinformation.PleaseseeQuestionO.5formoreinformation.
[IssuedApril18,2024]
O.3. Whichstateagenciescanrequestbenecialownershipinformation
fromFinCEN?
State,local,andTriballawenforcementagencies—i.e.,governmentagencies
authorizedbylawtoengageintheinvestigationorenforcementofcivilorcriminal
violationsoflaw—willbeabletorequestbenecialownershipinformation
fromFinCENincertaincircumstances.AState,local,orTriballawenforcement
agency,however,canonlyrequestbenecialownershipinformationfromFinCEN
ifauthorizedbya“courtofcompetentjurisdiction”toseektheinformationina
criminalorcivilinvestigation.Thestate,local,orTriballawenforcementagency
alsomustmeetcertainotheraccessrequirements,includingenteringintoa
memorandumofunderstandingwithFinCENthatdescribeshowtheagencywill
protectthesecurityandcondentialityoftheinformation.
Additionally,stateregulatoryagenciesthatsupervisenancialinstitutionsfor
compliancewithcustomerduediligencerequirementsmayalsorequestbenecial
ownershipinformationfromFinCENtoconductsuchsupervision.Likeother
domesticgovernmentagencies,toreceivebenecialownershipinformation
fromFinCEN,stateregulatoryagenciesmustalsoenterintoamemorandumof
understandingwithFinCENthatdescribeshowtheagencywillprotectthesecurity
andcondentialityoftheinformation.
[IssuedApril18,2024]
O.4. Canforeigngovernmentsaccessbenecialownershipinformation?
ForeigngovernmentscannotdirectlyaccessthebenecialownershipITsystem—the
securesystemthatFinCENusestoreceiveandstoreBOI—butwillbeabletorequest
benecialownershipinformationthroughintermediaryFederalagencies.Foreign
governmentsmayrequestbenecialownershipinformationforalawenforcement
investigationorprosecution,orforanationalsecurityorintelligenceactivity,that
isauthorizedunderthelawsoftheforeigncountry.Therearetwodierentrequest
channelsavailabletoforeigngovernments:
requestsmadeunderaninternationaltreaty,agreement,orconvention;or
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2. requestsmade,whennosuchtreaty,agreement,orconventionis
available,byalawenforcement,judicial,orprosecutorialauthorityof
aforeigncountrydeterminedbyFinCEN,withtheconcurrenceofthe
SecretaryofStateandinconsultationwiththeAttorneyGeneralorother
agenciesasnecessaryandappropriate,tobeatrustedforeigncountry.
Foreignrequestsforbenecialownershipinformationarenotyetbeingprocessed.
[IssuedApril18,2024]
O.5. Howshouldauthorizedrecipientspreparetoreceive,store,anduse
benecialownershipinformation?
Thepreparationsnecessarytoreceive,store,andusebenecialownership
informationwillvarydependingonthetypeofauthorizedrecipient.Those
interestedinaccessingbenecialownershipinformationshouldrstreviewthe
BenecialOwnershipInformationAccessandSafeguardsRule(andtherelevant
regulationsat31CFR1010.955).Dependingonthetypeofauthorizedrecipient,the
requirementsmayinclude,butarenotlimitedto,theagency:
• establishingstandardsandprocedurestoprotectthesecurityand
condentialityofbenecialownershipinformationreceived,including
proceduresfortrainingagencypersonnelontheappropriatehandlingand
safeguardingofsuchinformation;
• providingtoFinCENinitially,andannuallythereafter,areportthatdescribes
thestandardsandproceduresthattheagencyusestoensurethesecurityand
condentialityofanybenecialownershipinformationreceived;
• providingtoFinCENinitially,andthereaftersemi-annually,acertication
bytheheadoftheagency,onanon-delegablebasis,thattheagencyhas
standardsandproceduresthatappropriatelyimplementthesecurityand
condentialityrequirements;
• establishingordesignating,tothesatisfactionofFinCEN,asecuresystem
Q-:RP
• establishingandmaintainingapermanent,auditablesystemofstandardized
recordsoftheagency’srequestsforbenecialownershipinformation
including,foreachrequest,thedateoftherequest,nameofindividual
whomakestherequest,thereasonfortherequest,anydisclosureofsuch
informationmadebyortotherequestingagency,andotherinformationor
referencesnecessarytoreconstructreasonsfortherequest;
• conductinganannualinternalaudittoverifythatinformationobtainedfrom
FinCENhasbeenaccessedandusedappropriatelyandinaccordancewiththe
establishedstandardsandprocedures,providingtheresultsofthatauditto
FinCENuponrequest;and
• cooperatingwithFinCEN’sannualauditoftheadherenceofagenciesto
thesecurityandcondentialityrequirementstoensurethatagenciesare
requestingandusingtheinformationappropriately,includingbypromptly
providinganyinformationFinCENrequestsinsupportofitsannualaudit.
[IssuedApril18,2024]
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O.6. Althoughnancialinstitutionssubjecttocustomerduediligence
requirementsarenotcurrentlyrequiredtoaccessthebenecialownership
IT(BOIT)system,whatarethecurrentsupervisoryexpectationsifthey
choosetoaccessbenecialownershipinformationfromtheBOITsystem,
whenaccessbecomesavailabletothem?
FinCENanticipatesextendingaccesstotheBOITsystemtonancialinstitutions
subjecttocustomerduediligencerequirementsunderapplicablelaw,alongwith
theirsupervisors,inthespringof2025.FinCENintendstoprovideadditional
guidanceregardinganyspecicsupervisoryexpectationsfornancialinstitutions
thatchoosetoaccesstheBOITsystempriortothoseinstitutionsreceivingaccessto
PdP
Formoreinformation,seetheInteragencyStatementforBanksontheIssuance
oftheBenecialOwnershipInformationAccessRuleOPStatementforNon-
BankFinancialInstitutionsontheIssuanceoftheBenecialOwnershipInformation
AccessRule
[IssuedApril18,2024]
240
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RLTLVGLVFVVGLLVLGDR
ineectuntilJanuary1,2024.Noreportswillbeaccepted
priortothatdate.Entitiesrequiredtoreportwillbeableto
dosoonorafterJanuary1,2024.
DThisGuideispreparedinaccordancewiththerequirementsofSection212oftheSmallBusiness
RegulatoryEnforcementFairnessActof1996.Itisintendedtohelpsmallentitiescomplywiththebenecial
ownershipinformationreportingrulepromulgatedbytheU.S.DepartmentoftheTreasury’sFinancialCrimes
EnforcementNetwork(FinCEN).ThisGuideisexplanatoryonlyanddoesnotsupplementormodifyany
obligationsimposedbystatuteorregulation.Additionally,thisGuidedoesnotsupersedemorerecentguidance
documentsissuedbyFinCEN.FinCENmayalsorevisethisGuidetoclarifyorupdatecontent.Foradditional
andlatestinformation,consultwww.ncen.gov/boi.ForfurtherassistanceortosubmitfeedbackaboutthisGuide,
contactFinCENatwww.ncen.gov/contact.
TheoriginalversionofthisdocumentiswritteninEnglish.FinCENhaspreparedthistranslationasaconvenience
toreaders;intheeventofanydiscrepancyoruncertainty,theEnglishversioncontrolsthemeaning.
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VLRR
FinCENupdatesthisGuideonaperiodicbasis.Belowisaversionlogsummarizingthehistory
ofthisGuide.
D VLR SummaryofChanges
September2023 1.0 Originalversion
December2023 1.1 Revisedlanguagethroughouttoincorporateextensionof
reportingtimelineforreportingcompaniescreatedonor
afterJanuary1,2024,andbeforeJanuary1,2025,and
miscellaneousotheredits.
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TableofContents
RGFLR....................................................................................................................................Y
Chapter1.Doesmycompanyhavetoreportitsbenecialowners?.........................................1
1.1Ismycompanya“reportingcompany”?.............................................................................2
1.2Ismycompanyexemptfromthereportingrequirements?..................................................4
1.3WhathappensifmycompanydoesnotreportBOIintherequiredtimeframe?...............15
Chapter2.Whoisabenecialownerofmycompany?............................................................16
2.1Whatissubstantialcontrol?..............................................................................................17
2.2Whatisownershipinterest?...............................................................................................18
2.3WhatstepscanItaketoidentifymycompany’sbenecialowners?.................................19
2.4Whoqualiesforanexceptionfromthebenecialownerdenition?.............................29
Chapter3.Doesmycompanyhavetoreportitscompanyapplicants?..................................32
3.1Ismycompanyrequiredtoreportitscompanyapplicants?..............................................33
3.2Whoisacompanyapplicantofmycompany?..................................................................34
Chapter4.Whatspecicinformationdoesmycompanyneedtoreport?.............................37
4.1WhatinformationshouldIcollectaboutmycompany,itsbenecialowners,
anditscompanyapplicants?....................................................................................................38
4.2WhatdoIreportifaspecialreportingruleappliestomycompany?................................39
4.3WhatisaFinCENidentierandhowcanIuseit?............................................................40
Chapter5.WhenandhowshouldmycompanyleitsinitialBOIreport?...........................41
5.1WhenshouldmycompanyleitsinitialBOIreport?.......................................................42
5.2HowdoesmycompanyleaBOIreport?........................................................................43
Chapter6.Whatiftherearechangestoorinaccuraciesinreportedinformation?..............44
6.1WhatshouldIdoifpreviouslyreportedinformationchanges?.........................................45
6.2WhatshouldIdoifIlearnofaninaccuracyinareport?...................................................47
6.3Whatshouldmycompanydoifitbecomesexemptafteralreadylingareport?...........47
AppendixA-GuideandRegulationReferencePage...............................................................48
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RGFLR
FinCENispublishingthisSmallEntityComplianceGuide(Guide)
1
tohelpsmallentities
complywiththerequirementsoftheBenecialOwnershipInformationReportingRule
(referencedinthisGuideastheReportingRule).Inparticular,smallentitiesmayhavenew
requirementsundertheReportingRule.FinCENiscommittedtoensuringthatthesmall
businesscommunityandotherreportingcompanieshavethetoolstheyneedtocomplywith
thenewrequirements,andthattheprocessisassmoothandstreamlinedaspossible.FinCEN
isstrivingtoreducetheburdenonsmallbusinessesbyprovidingcomprehensiveguidanceand
communicatinginformationaboutthereportingrequirementsinplainlanguage.
TheReportingRulerequirescertainentitiestolebenecialownershipinformation(BOI)
reports(referencedinthisGuideasBOIreportsorreports)toFinCEN.Reportscontain
informationabouttheentityitselfandtwocategoriesofindividuals:
1. Benecialowners
2. Companyapplicants
ThesetermswillbedescribedindetaillaterinthisGuide,butingeneral,abenecialowneris
anindividualwhoownsorcontrolsatleast25percentofacompanyorhassubstantialcontrol
overthecompany,andacompanyapplicantisanindividualwhodirectlylesorisprimarily
responsibleforthelingofthedocumentthatcreatesorregistersthecompany.
TheReportingRule,
2
issuedonSeptember30,2022,implementsSection6403oftheCorporate
TransparencyAct.TheruledescribeswhomustleBOIreports,whatinformationtheymust
provide,andwhentheymustlethereports.
TheReportingRuleisfoundat1010.380intitle31oftheCodeofFederalRegulations
(CFR).AnelectronicversionisalsoavailablethroughFinCEN’swebsite.Specicsections
oftheReportingRulearecitedthroughoutthisGuideusingthecitation“1010.380[paragraph
number].”AppendixAtothisGuideprovidesanindexofwherethisGuidecitestothedierent
partsoftheregulation.ThisGuidecoversalltheprovisionsof1010.380.
1ThisGuidesatisesFinCEN’sobligationsunderSection212oftheSmallBusinessRegulatoryEnforcement
FairnessActof1996,amendedbySection8302oftheFairMinimumWageActof2007.SeeSmallBusiness
RegulatoryEnforcementFairnessActof1996,Pub.L.No.104-121,§212,110Stat.857,858(1996),availableat
www.govinfo.gov/content/pkg/PLAW-104publ121/pdf/PLAW-104publ121.pdf.
FairMinimumWageActof2007,Pub.L.No.110-28,§8302,121Stat.112,204(2007),availableat
www.govinfo.gov/content/pkg/PLAW-110publ28/pdf/PLAW-110publ28.pdf.ThisGuidesummarizesand
explainstheReportingRulebutisnotasubstitutefortheReportingRule.ThelanguageoftheReportingRule
itself,notthisGuide,establishesaperson’slegalobligations.
2 AllhyperlinksarecurrentasofthedateoftheGuide’spublication.
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StartingonJanuary1,2024,BOIreportsmustbeledelectronicallyusingFinCEN’ssecure
lingsystem.FinCENwillstoreBOIreportsinacentralizeddatabaseandonlysharethis
informationwithauthorizedusersforpurposesspeciedbylaw.Thedatabasewilluserigorous
informationsecuritymethodsandcontrolstypicallyusedintheFederalgovernmenttoprotect
non-classiedyetsensitiveinformationsystemsatthehighestsecuritylevel.
WhendoIneedtoleareport?
• ReportswillbeacceptedstartingonJanuary1,2024.
• ReportingcompaniescreatedorregisteredtodobusinessbeforeJanuary1,2024,
willhaveadditionaltime—untilJanuary1,2025—toletheirinitialBOIreports.
• ReportingcompaniescreatedorregisteredonorafterJanuary1,2024,andbeforeJanuary
1,2025,have90calendardaysafterreceivingactualorpublicnoticethattheircompany’s
creationorregistrationiseectivetoletheirinitialBOIreports.Specically,this
90-calendardaydeadlinerunsfromthetimethecompanyreceivesactualnoticethatits
creationorregistrationiseective,orafterasecretaryofstateorsimilarocerstprovides
publicnoticeofitscreationorregistration,whicheverisearlier.
• ReportingcompaniescreatedorregisteredonorafterJanuary1,2025,willhave30
calendardaysfromactualorpublicnoticethatthecompany’screationorregistrationis
eectivetoletheirinitialBOIreports.
WherecanIndadditionalinformationaboutBOIreporting?
• AdditionalinformationabouttheReportingRuleandguidancematerialsareavailableat
www.ncen.gov/boi.
• FinCENhasissuedandwillcontinuetoissuefrequentlyaskedquestionstoaddress
specicquestionsonthetopic.Theycanbefoundhere:www.ncen.gov/boi-faqs.
• Inaddition,ifyouhaveanyquestionsregardingBOIreportingobligations,youshould
contactFinCENatwww.ncen.gov/contact.
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WhatdoesthisGuideinclude?
TherearesixkeyquestionstohelpyoucomplywiththeReportingRule.ThisGuideincludes
achapterforeachkeyquestion,listedbelow.ThisGuideincludesinteractiveowcharts,
checklists,andotheraidstohelpyoudeterminewhetheryourcompanyneedstoleaBOIreport
withFinCEN,andifso,howtocomplywiththereportingrequirements.ThisGuidewillbe
updatedperiodicallywithneworrevisedinformation.
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NotallcompaniesarerequiredtoreportBOItoFinCENundertheReportingRule.Companies
arerequiredtoreportonlyiftheymeettheReportingRule’sdenitionofa“reportingcompany”
anddonotqualifyforanexemption.Thischapterwillhelpyoudeterminewhetheryour
companyqualies.Thischaptercoversthedenitionofreportingcompany,describesentities
thatareexempt,andexplainswhathappensiftherequiredinformationisnotreported:
1.1 Ismycompanya“reportingcompany”?
1.2 Ismycompanyexemptfromthereportingrequirements?
1.3 WhathappensifmycompanydoesnotreportBOIintherequiredtimeframe?
SUURUSRURPS
SRURR
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2
,FRRWFR
TheReportingRulerequiresthatall“reportingcompanies”leBOIreportswithFinCEN
withinthepreviouslyspeciedtimeframes.Areportingcompanyisanyentitythatmeetsthe
“reportingcompany”denitionanddoesnotqualifyforanexemption.Therearetwocategories
ofreportingcompanies:a“domesticreportingcompany”anda“foreignreportingcompany”.
Ifyourcompanyisneithera“domesticreportingcompany”nor“foreignreportingcompany”
becauseitdoesnotmeeteitherdenition(asdescribedbelow)oritqualiesforanexemption,
thenitisnotrequiredtoleaBOIreportwithFinCEN.
Thefollowingchartshowshowtoanalyzewhetheryourcompanyisa“reportingcompany”:
Chart1–Reportingcompanydenition
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Unlessotherwisespecied,StatesandIndiantribeshavethefollowingmeaningsinthis
GuideandtheReportingRule.
• StatesmeansanyStateoftheUnitedStates,theDistrictofColumbia,the
CommonwealthofPuertoRico,theCommonwealthoftheNorthernMariana
Islands,AmericanSamoa,Guam,theUnitedStatesVirginIslands,andanyother
commonwealth,territory,orpossessionoftheUnitedStates.
• IndiantribesmeansanyIndianorAlaskaNativetribe,band,nation,pueblo,villageor
communitythattheSecretaryoftheInterioracknowledgestoexistasanIndiantribe.
(Seesection102oftheFederallyRecognizedIndianTribeListActof1994
(25U.S.C.5130)).
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,FRWIRWRWTW
TheReportingRuleexemptstwenty-three(23)specictypesofentitiesfromthereporting
requirementslistedinChart2below.Anentitythatqualiesforanyoftheseexemptionsisnot
requiredtosubmitBOIreportstoFinCEN.
Chart2–Reportingcompanyexemptions
ExemptionNo. ExemptionShortTitle
1 Securitiesreportingissuer
2 Governmentalauthority
3 Bank
4 Creditunion
5 Depositoryinstitutionholdingcompany
6 Moneyservicesbusiness
7 Brokerordealerinsecurities
8 Securitiesexchangeorclearingagency
9 OtherExchangeActregisteredentity
10 Investmentcompanyorinvestmentadviser
11 Venturecapitalfundadviser
12 Insurancecompany
13 State-licensedinsuranceproducer
14 CommodityExchangeActregisteredentity
15 Accountingrm
16 Publicutility
17 Financialmarketutility
18 Pooledinvestmentvehicle
19 Tax-exemptentity
20 Entityassistingatax-exemptentity
21 Largeoperatingcompany
22 Subsidiaryofcertainexemptentities
23 Inactiveentity
SURURUSRRP
IfanentitymeetsthecriteriaofExemption#18andisformedunderthelawsofaforeign
country,theentityissubjecttoaseparatereportingrequirement.Thesecompanies
arereferredtoas“foreignpooledinvestmentvehicles”intheReportingRuleandtheir
reportingrequirementisexplainedinChapter4.2ofthisGuide.
SU
Thecriteriaforeachexemptionareprovidedinacheck-boxformatinthefollowingpages
toassistyourcompanyinansweringthequestion,“Ismycompanyexemptfromthe
reportingrequirements?”
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Securitiesreportingissuer(Exemption#1)
AnentityqualiesforthisexemptionifLofthefollowingtwocriteriaapply:
1.Theentityisanissuerofaclassofsecuritiesregistered
undersection12oftheSecuritiesExchangeActof
1934(15U.S.C.78l).
£Yes£No
2.Theentityisrequiredtolesupplementaryand
periodicinformationundersection15(d)ofthe
SecuritiesExchangeActof1934(15U.S.C.78o(d)).
£Yes£No
Governmentalauthority(Exemption#2)
Anentityqualiesforthisexemptionifbothofthefollowingcriteriaapply:
1.TheentityisestablishedunderthelawsoftheUnited
States,anIndiantribe,aState,orapoliticalsubdivision
ofaState,orunderaninterstatecompactbetweentwo
ormoreStates.
£Yes£No
2.Theentityexercisesgovernmentalauthorityonbehalf
oftheUnitedStatesoranysuchIndiantribe,State,or
politicalsubdivision.
£Yes£No
Bank(Exemption#3)
Anentityqualiesforthisexemptionifanyofthefollowingthreecriteriaapply:
1.Theentityisa“bank”asdenedinsection3ofthe
FederalDepositInsuranceAct(12U.S.C.1813). £Yes£No
2.Theentityisa“bank”asdenedinsection2(a)ofthe
InvestmentCompanyActof1940(15U.S.C.80a-2(a)). £Yes£No
3.Theentityisa“bank”asdenedinsection202(a)ofthe
InvestmentAdvisersActof1940(15U.S.C.80b-2(a)). £Yes£No
CreditUnion(Exemption#4)
AnentityqualiesforthisexemptionifLofthefollowingtwocriteriaapply:
1.Theentityisa“Federalcreditunion”asdenedinsection
101oftheFederalCreditUnionAct(12U.S.C.1752). £Yes£No
2.Theentityisa“Statecreditunion”asdenedinsection
101oftheFederalCreditUnionAct(12U.S.C.1752). £Yes£No
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Depositoryinstitutionholdingcompany(Exemption#5)
AnentityqualiesforthisexemptionifLofthefollowingtwocriteriaapply:
1.Theentityisa“bankholdingcompany”asdenedin
section2oftheBankHoldingCompanyActof1956
(12U.S.C.1841).
£Yes£No
2.Theentityisa“savingsandloanholdingcompany”as
denedinsection10(a)oftheHomeOwners’LoanAct
(12U.S.C.1467a(a)).
£Yes£No
Moneytransmitterbusiness(Exemption#6)
AnentityqualiesforthisexemptionifLofthefollowingtwocriteriaapply:
1.Theentityisamoneytransmittingbusinessregistered
withFinCENunder31U.S.C.5330.£Yes£No
2.Theentityisamoneyservicesbusinessregisteredwith
FinCENunder31CFR1022.380.£Yes£No
Brokerordealerinsecurities(Exemption#7)
Anentityqualiesforthisexemptionifbothofthefollowingcriteriaapply:
1.Theentityisa“broker”or“dealer,”asthosetermsare
denedinsection3oftheSecuritiesExchangeActof
1934(15U.S.C.78c).
£Yes£No
2.Theentityisregisteredundersection15ofthe
SecuritiesExchangeActof1934(15U.S.C.78o). £Yes£No
Securitiesexchangeorclearingagency(Exemption#8)
Anentityqualiesforthisexemptionifbothofthefollowingcriteriaapply:
1.Theentityisan“exchange”or“clearingagency,”asthose
termsaredenedinsection3oftheSecuritiesExchange
Actof1934(15U.S.C.78c).
£Yes£No
2.Theentityisregisteredundersections6or17Aofthe
SecuritiesExchangeActof1934(15U.S.C.78f,78q-1). £Yes£No
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OtherExchangeActregisteredentity(Exemption#9)
Anentityqualiesforthisexemptionifbothofthefollowingcriteriaapply:
1.Theentityisnotasecuritiesreportingissuerasdenedin
Exemption#1,brokerordealerinsecuritiesasdenedin
Exemption#7,orsecuritiesexchangeorclearingagency
asdenedinExemption#8.
£Yes£No
2.TheentityisregisteredwiththeSecuritiesandExchange
CommissionundertheSecuritiesExchangeActof1934
(15U.S.C.78aetseq.).
£Yes£No
Investmentcompanyorinvestmentadviser(Exemption#10)
Anentityqualiesforthisexemptionifbothofthefollowingcriteriaapply:
1.Theentityisan“investmentcompany”or“investment
adviser”denedaseither:
• Aninvestmentcompanyinsection3oftheInvestment
CompanyActof1940(15U.S.C.80a-3);or
• Aninvestmentadviserinsection202ofthe
InvestmentAdvisersActof1940(15U.S.C.80b-2).
£Yes£No
2.TheentityisregisteredwiththeSecuritiesand
ExchangeCommissionundereitheroftheseauthorities:
• TheInvestmentCompanyActof1940
(15U.S.C.80a-1T.);or
• TheInvestmentAdvisersActof1940
(15U.S.C.80b-1T.).
£Yes£No
Venturecapitalfundadviser(Exemption#11)
Anentityqualiesforthisexemptionifbothofthefollowingcriteriaapply:
1.Theentityisaninvestmentadviserthatisdescribedin
section203(l)oftheInvestmentAdvisersActof1940
(15U.S.C.80b-3(l)).
£Yes£No
2.TheentityhasledItem10,ScheduleA,andScheduleB
ofPart1AofFormADV,oranysuccessorthereto,with
theSecuritiesandExchangeCommission.
£Yes£No
Insurancecompany(Exemption#12)
Anentityqualiesforthisexemptionifthefollowingcriterionapplies:
1.Theentityisan“insurancecompany”asdefinedinsection
2oftheInvestmentCompanyActof1940(15U.S.C.80a-2). £Yes£No
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State-licensedinsuranceproducer(Exemption#13)
Anentityqualiesforthisexemptionifbothofthefollowingcriteriaapply:
1.Theentityisaninsuranceproducerthatisauthorized
byaStateandsubjecttosupervisionbytheinsurance
commissionerorasimilarocialoragencyofaState.
£Yes£No
2.Theentityhasanoperatingpresenceataphysicaloce
8Theterm“operatingpresence
ataphysicalocewithintheUnitedStates”meansthat
anentityregularlyconductsitsbusinessataphysical
locationintheUnitedStatesthattheentityownsor
leasesandthatisphysicallydistinctfromtheplaceof
businessofanyotherunaliatedentity.
£Yes£No
CommodityExchangeActregisteredentity(Exemption#14)
AnentityqualiesforthisexemptionifLofthefollowingtwocriteriaapply:
1.Theentityisa“registeredentity”asdenedinsection1a
oftheCommodityExchangeAct(7U.S.C.1a). £Yes£No
2.Theentityisoneoftheseentitiesregisteredwiththe
CommodityFuturesTradingCommissionunderthe
CommodityExchangeAct:
• “Futurescommissionmerchant”asdenedin
section1aoftheCommodityExchangeAct
(7U.S.C.1a);
• “Introducingbroker”asdenedinsection1aofthe
CommodityExchangeAct(7U.S.C.1a);
• “Swapdealer”asdenedinsection1aofthe
CommodityExchangeAct(7U.S.C.1a);
• “Majorswapparticipant”asdenedinsection1aof
theCommodityExchangeAct(7U.S.C.1a);
• “Commoditypooloperator”asdenedinsection1a
oftheCommodityExchangeAct(7U.S.C.1a);
• “Commoditytradingadvisor”asdenedinsection
1aoftheCommodityExchangeAct(7U.S.C.1a);
or
• “Retailforeignexchangedealer”asdescribedin
section2(c)(2)(B)oftheCommodityExchangeAct
(7U.S.C.2(c)(2)(B)).
£Yes£No
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Publicaccountingrm(Exemption#15)
Anentityqualiesforthisexemptionifthefollowingcriterionapplies:
1.Theentityisapublicaccountingrmregisteredin
accordancewithsection102oftheSarbanes-OxleyAct
of2002(15U.S.C.7212).
£Yes£No
Publicutility(Exemption#16)
Anentityqualiesforthisexemptionifbothofthefollowingcriteriaapply:
1.Theentityisa“regulatedpublicutility”asdenedin
26U.S.C.7701(a)(33)(A).£Yes£No
2.Theentityprovidestelecommunicationsservices,
electricalpower,naturalgas,orwaterandsewerservices
withintheUnitedStates.
£Yes£No
Financialmarketutility(Exemption#17)
Anentityqualiesforthisexemptionifthefollowingcriterionapplies:
1.Theentityisanancialmarketutilitydesignatedbythe
FinancialStabilityOversightCouncilundersection804
ofthePayment,Clearing,andSettlementSupervisionAct
of2010(12U.S.C.5463).
£Yes£No
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Pooledinvestmentvehicle(Exemption#18)
Anentityqualiesforthisexemptionifbothofthefollowingcriteriaapply:
1.TheentityisapooledinvestmentvehicleifLof
thesestatementsapplytotheentity:
• Isaninvestmentcompany,asdenedinsection
3(a)oftheInvestmentCompanyActof1940
(15U.S.C.80a-3(a);or
• Isacompanythatwouldbeaninvestmentcompany
underthatsectionbutfortheexclusionprovided
fromthatdenitionbyparagraph(1)or(7)of
section3(c)ofthatAct(15U.S.C.80a-3(c));and
isidentiedbyitslegalnamebytheapplicable
investmentadviserinitsFormADV,(orsuccessor
form)ledwiththeSecuritiesandExchange
Commissionorwillbesoidentiedinthenext
annualupdatingamendmenttoFormADVrequired
tobeledbytheapplicableinvestmentadviser
pursuanttorule204-1undertheInvestment
AdvisersActof1940(17CFR275.204-1).
£Yes£No
2.Theentityisoperatedoradvisedbyanyofthesetypes
ofexemptentities:
• Bank,asdenedinExemption#3;
• Creditunion,asdenedinExemption#4;
• Brokerordealerinsecurities,asdenedin
Exemption#7;
• Investmentcompanyorinvestmentadviser,as
denedinExemption#10;or
• Venturecapitalfundadviser,asdenedin
Exemption#11.
£Yes£No
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Tax-exemptentity(Exemption#19)
Anentityqualiesforthisexemptionifanyofthefollowingfourcriteriaapply:
1.Theentityisanorganizationthatisdescribedinsection
501(c)oftheInternalRevenueCodeof1986(Code)
(determinedwithoutregardtosection508(a)oftheCode)
andexemptfromtaxundersection501(a)oftheCode.
£Yes£No
2.Theentityisanorganizationthatisdescribedinsection
501(c)oftheCode,andwasexemptfromtaxunder
section501(a)oftheCode,butlostitstax-exemptstatus
lessthan180daysago.
£Yes£No
3.Theentityisapoliticalorganization,asdenedin
section527(e)(1)oftheCode,thatisexemptfromtax
undersection527(a)oftheCode.
£Yes£No
4.Theentityisatrustdescribedinparagraph(1)or(2)of
section4947(a)oftheCode.£Yes£No
Entityassistingatax-exemptentity(Exemption#20)
AnentityqualiesforthisexemptionifallIRofthefollowingcriteriaapply:
1.Theentityoperatesexclusivelytoprovidenancial
assistanceto,orholdgovernancerightsover,anytax-
exemptentitydescribedbyExemption#19.
£Yes£No
2.TheentityisaUnitedStatespersonasdenedinsection
7701(a)(30)oftheInternalRevenueCodeof1986.£Yes£No
3.Theentityisbeneciallyownedorcontrolledexclusively
byoneormoreUnitedStatespersonsthatareUnited
Statescitizensorlawfullyadmittedforpermanent
residence.“Lawfullyadmittedforpermanentresidence”
isdenedinsection101(a)oftheImmigrationand
NationalityAct(8U.S.C.1101(a)).
£Yes£No
4.Theentityderivesatleastamajorityofitsfundingor
revenuefromoneormoreUnitedStatespersonsthat
areUnitedStatescitizensorlawfullyadmittedfor
permanentresidence.
£Yes£No
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Largeoperatingcompany(Exemption#21)
AnentityqualiesforthisexemptionifallVLofthefollowingcriteriaapply:
1.Theentityemploysmorethan20fulltimeemployees,
whenapplyingthemeaningoffull-timeemployee
providedin26CFR54.4980H-1(a)and54.4980H-3.
Ingeneral,“full-timeemployee”means,withrespect
toacalendarmonth,anemployeewhoisemployedan
averageofatleast30hoursofserviceperweekwith
anemployer.
£Yes£No
2.Morethan20full-timeemployeesoftheentityare
employedinthe“UnitedStates,”asthattermisdened
in31CFR1010.100(hhh).
£Yes£No
3.Theentityhasanoperatingpresenceataphysical
ocewithintheUnitedStates.“Operatingpresenceat
aphysicalocewithintheUnitedStates”meansthat
anentityregularlyconductsitsbusinessataphysical
locationintheUnitedStatesthattheentityownsor
leasesandthatisphysicallydistinctfromtheplaceof
businessofanyotherunaliatedentity.
£Yes£No
4.TheentityentityledaFederalincometaxor
informationreturnintheUnitedStatesfortheprevious
yeardemonstratingmorethan$5,000,000ingross
receiptsorsales.Iftheentityispartofanaliated
groupofcorporationswithinthemeaningof26U.S.C.
1504,refertotheconsolidatedreturnforsuchgroup.
£Yes£No
5.Theentityreportedthisgreater-than-$5,000,000amount
asgrossreceiptsorsales(netofreturnsandallowances)
ontheentity’sIRSForm1120,consolidatedIRSForm
1120,IRSForm1120-S,IRSForm1065,orother
applicableIRSform.
£Yes£No
6.Whengrossreceiptsorsalesfromsourcesoutsidethe
UnitedStates,asdeterminedunderFederalincome
taxprinciple,areexcludedfromtheentity’samountof
grossreceiptsorsales,theamountremainsgreaterthan
$5,000,000.
£Yes£No
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Subsidiaryofcertainexemptentities(Exemption#22)
Anentityqualiesforthisexemptionifthefollowingcriterionapplies:
1.Theentity’sownershipinterestsarecontrolledorwholly
owned,directlyorindirectly,byanyofthesetypesof
exemptentities:
• Securitiesreportingissuer,asdenedin
Exemption#1;
• Governmentalauthority,asdenedin
Exemption#2;
• Bank,asdenedinExemption#3;
• Creditunion,asdenedinExemption#4;
• Depositoryinstitutionholdingcompany,asdened
inExemption#5;
• Brokerordealerinsecurities,asdenedin
Exemption#7;
• Securitiesexchangeorclearingagency,asdened
inExemption#8;
• OtherExchangeActregisteredentity,asdenedin
Exemption#9;
• Investmentcompanyorinvestmentadviser,as
denedinExemption#10;
• Venturecapitalfundadviser,asdenedin
Exemption#11;
• Insurancecompany,asdenedinExemption#12;
• State-licensedinsuranceproducer,asdenedin
Exemption#13;
• CommodityExchangeActregisteredentity,as
denedinExemption#14;
• Accountingrm,asdenedinExemption#15;
• Publicutility,asdenedinExemption#16;
• Financialmarketutility,asdenedin
Exemption#17;
• Tax-exemptentity,asdenedinExemption#19;or
• Largeoperatingcompany,asdenedin
Exemption#21.
£Yes£No
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Inactiveentity(Exemption#23)
AnentityqualiesforthisexemptionifallVLofthefollowingcriteriaapply:
1.TheentitywasinexistenceonorbeforeJanuary1,2020. £Yes£No
2.Theentityisnotengagedinactivebusiness. £Yes£No
3.Theentityisnotownedbyaforeignperson,whether
directlyorindirectly,whollyorpartially.“Foreign
person”meansapersonwhoisnotaUnitedStates
person.AUnitedStatespersonisdenedinsection
7701(a)(30)oftheInternalRevenueCodeof1986
asacitizenorresidentoftheUnitedStates,domestic
partnershipandcorporation,andotherestatesandtrusts.
£Yes£No
4.Theentityhasnotexperiencedanychangeinownership
intheprecedingtwelve-monthperiod. £Yes£No
5.Theentityhasnotsentorreceivedanyfundsinan
amountgreaterthan$1,000,eitherdirectlyorthrough
anynancialaccountinwhichtheentityoranyaliate
oftheentityhadaninterest,intheprecedingtwelve-
monthperiod.
£Yes£No
6.Theentitydoesnototherwiseholdanykindortypeof
assets,whetherintheUnitedStatesorabroad,including
anyownershipinterestinanycorporation,limited
liabilitycompany,orothersimilarentity.
£Yes£No
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WIFRRRWRW2,W
TWI
FinCENisissuingthisGuideandotherguidance,aswellasconductingoutreach,toensurethat
allreportingcompaniesareawareoftheirreportingobligations,includingtheirobligationsto
updateorcorrectbenecialownershipinformation.Ifapersonhasreasontobelievethatareport
ledwithFinCENcontainsinaccurateinformationandvoluntarilysubmitsareportcorrectingthe
informationwithin90daysofthedeadlinefortheoriginalreport,thentheCorporateTransparency
Actcreatesasafeharborfrompenalty.However,shouldapersonwillfullyfailtoreportcomplete
orupdatedbenecialownershipinformationtoFinCENasrequiredundertheReportingRule,
FinCENwilldeterminetheappropriateenforcementresponseinconsiderationofitspublished
enforcementfactors.
ThewillfulfailuretoreportcompleteorupdatedbenecialownershipinformationtoFinCEN,or
thewillfulprovisionoforattempttoprovidefalseorfraudulentbenecialownershipinformation
mayresultinacivilorcriminalpenalties,includingcivilpenaltiesofupto$500foreachdaythat
theviolationcontinues,orcriminalpenaltiesincludingimprisonmentforuptotwoyearsand/or
aneofupto$10,000.SeniorocersofanentitythatfailstolearequiredBOIreportmaybe
heldaccountableforthatfailure.
Providingfalseorfraudulentbenecialownershipinformationcouldincludeprovidingfalse
identifyinginformationaboutanindividualidentiedinaBOIreport,suchasbyprovidinga
RSRURP
Additionally,apersonmaybesubjecttociviland/orcriminalpenaltiesforwillfullycausinga
companynottolearequiredBOIreportortoreportincompleteorfalsebenecialownership
informationtoFinCEN.
Forexample,anindividualwhoqualiesasabenecialowneroracompanyapplicantmight
URSURRUPRRRPSRRRSURRPS
benecialownershipinformationtoFinCENwithoutit.Also,anindividualmightprovidefalse
informationtoacompany,knowingthatinformationismeanttobereportedtoFinCEN.
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Ifyourcompanyisareportingcompany,yournextstepistoidentifyitsbenecialowners.
Abenecialownerisanyindividualwho,directlyorindirectly:
• ExercisesDDoverareportingcompany;
OR
• Ownsorcontrolsatleast25percentoftheSofareportingcompany.
Anindividualmightbeabenecialownerthroughsubstantialcontrol,ownershipinterests,or
both.Reportingcompaniesarenotrequiredtoreportthereason(i.e.,substantialcontrolor
ownershipinterests)thatanindividualisabenecialowner.
Areportingcompanycanhavemultiplebenecialowners.Forexample,areportingcompany
couldhaveonebenecialownerwhoexercisessubstantialcontroloverthereportingcompany,
andafewotherbenecialownerswhoownorcontrolatleast25percentoftheownership
interestsofthereportingcompany.Areportingcompanycouldhaveonebenecialownerwho
bothexercisessubstantialcontrolandownsorcontrolsatleast25percentoftheownership
interestsofthereportingcompany.Thereisnomaximumnumberofbenecialownerswhomust
bereported.
FinCENexpectsthateveryreportingcompanywillbesubstantiallycontrolledbyoneormore
individuals,andthereforethateveryreportingcompanywillbeabletoidentifyandreportatleast
onebenecialownertoFinCEN.Thefollowingfoursectionswillassistyouindeterminingyour
company’sbenecialowners.Ifanindividualqualiesasabenecialowner,informationabout
thatindividualmustbereportedtoFinCENinareportingcompany’sBOIreport.
2.1Whatissubstantialcontrol?
2.2Whatisanownershipinterest?
2.3WhatstepscanItaketoidentifymycompany’sbenecialowners?
2.4Whoqualiesforanexceptionfromthebenecialownerdenition?
Thischaptergenerallycovers1010.380(d),“Benecialowner”.
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WWWOFRWRO
ReportingcompaniesarerequiredtoidentifyallindividualswhoexerciseDD
overthecompany.Thereisnolimittothenumberofindividualswhocanbereportedfor
exercisingsubstantialcontrol.AnindividualexercisesDDoverareporting
companyiftheindividualmeetsanyoffourgeneralcriteria:(1)theindividualisaseniorocer;
(2)theindividualhasauthoritytoappointorremovecertainocersoramajorityofdirectorsof
thereportingcompany;(3)theindividualisanimportantdecision-maker;or(4)theindividual
hasanyotherformofsubstantialcontroloverthereportingcompany.Seethechartbelowfor
detailsaboutthesecriteria.
Chart3–Substantialcontrolindicators
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WRWW
Reportingcompaniesarerequiredtoidentifyallindividualswhoownorcontrolatleast25
percentoftheSofthecompany.Anyofthefollowingmaybeanownership
interest:equity,stock,orvotingrights;acapitalorprotinterest;convertibleinstruments;
optionsorothernon-bindingprivilegestobuyorsellanyoftheforegoing;andanyother
instrument,contract,orothermechanismusedtoestablishownership.Areportingcompanymay
havemultipletypesofownershipinterests.Thefollowingchartidentiestheownershipinterest
typesandprovidesexamples.
Chart4–Ownershipinterests
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WWF,WNWRWIFR
benecialowners?
Yourcompanycanidentifybenecialownersbytakingthefollowingsteps:
Step1:Identifyindividualswhoexercisesubstantialcontroloverthecompany.
Examplesareprovidedbelowtohelpyouidentifythoseindividuals.
Step2:Identifythetypesofownershipinterestsinyourcompanyandtheindividualsthathold
thoseownershipinterests.Examplesareprovidedbelowtohelpidentication.
Step3:Calculatethepercentageofownershipinterestshelddirectlyorindirectlybyindividuals
toidentifyindividualswhoownorcontrol,directlyorindirectly,atleast25percentofthe
ownershipinterestsofthecompany.
Hereareadditionaldetailsoneachstep:
SIndividualsmaydirectlyorindirectlyexercisesubstantialcontrol.Individualscan
exercisesubstantialcontrolthroughcontracts,arrangements,understandings,relationships,
orotherwise.
Examplesofdirectwaystoexercisesubstantialcontrol
overareportingcompanyare:
• Boardrepresentation.
• Ownershiporcontrolofamajorityofvotingpower
orvotingrights.
• Rightsassociatedwithnancingorinterest.
Examplesofindirectwaystoexercisesubstantialcontroloverareportingcompanyare:
• Controllingoneormoreintermediaryentitiesthatseparatelyorcollectivelyexercise
substantialcontroloverareportingcompany.
• Througharrangementsornancialorbusinessrelationshipswithotherindividualsor
entitiesactingasnominees.
Whilekeepingtheseexamplesinmind,thefollowingquestionscanhelpidentifywhich
individualsexercisesubstantialcontroloveryourcompany.Multiplecriteriacanapplyto
oneindividual.
1atrusteeofa
trustorsimilararrangement
mayexercisesubstantial
controloverareporting
company.
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Substantialcontrolquestion: Answer Ifresponseis“Yes”:
1.Doesyourcompanyhaveapresident,chief
nancialocer,generalcounsel,chief
executiveocer,orchiefoperatingocer?
£Yes
£No
Thereareseniorocers
inyourcompany.
2.Doesyourcompanyhaveanyotherocers
thatperformfunctionssimilartothoseof
aPresident,chiefnancialocer,general
counsel,chiefexecutiveocer,orchief
operatingocer?
1Oneindividualmayperformoneor
morefunctionsforacompany,oracompany
maynothaveanindividualwhoperformsany
ofthesefunctions.
£Yes
£No
3.Doesyourcompanyhaveaboardofdirectors
orsimilarbodyANDdoesanyindividualhave
theabilitytoappointorremoveamajorityof
thatboardorbody?
£Yes
£No Thereareindividuals
withDRLR
removalauthorityover
yourcompany.
4.Doesanyindividualhavetheabilitytoappoint
orremoveaseniorocerof
yourcompany?
£Yes
£No
5.Doesanyindividualdirect,determine,orhave
substantialinuenceoverimportantdecisions
madebyyourcompany,includingdecisions
regardingyourcompany’sbusiness,nances,
orstructure?
1Certainemployeeswhomighttthis
descriptionareneverthelessexemptfromthe
benecialownerdenition.Seesection2.4for
moreinformation.
£Yes
£No
ThereareLRD
decision-makersover
yourcompany.
6.Arethereanyotherindividualswhohave
substantialcontroloveryourcompanyinways
otherthanthoseidentiedin1-5above?
£Yes
£No
Thereareindividuals
towhomthecatch-all
wouldapply.
CompleteStep1:Onceyouhavereviewedtheexamplesandquestionsforexercisingsubstantial
controlabove,youwillhaveenoughinformationtocompleteStep1(identifytheindividuals
whomeetthesubstantialcontrolcriteriaforyourcompany).Theindividualsyouhaveidentied
willbereportedasbenecialownersinyourcompany’sBOIreportunlesstheyqualifyforan
exception,asdiscussedinthenextsectionofthechapter(section2.4).
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Step2:Individualsmaydirectlyorindirectlyownorcontrolownershipinterests.Individualscan
ownorcontrolownershipintereststhroughcontracts,arrangements,understandings,relationships,
orotherwise.
Examplesofdirectwaystoownorcontrol
ownershipinterestsinareportingcompanyare:
• Jointownershipwithoneormore
otherpersonsofanundividedinterest
inanownershipinterest.
Examplesofindirectwaystoownorcontrol
ownershipinterestsinareportingcompanyare:
• Owningorcontrollingoneormore
intermediaryentities,ortheownership
interestsofanyintermediaryentities,
thatseparatelyorcollectivelyownor
controlownershipinterestsofa
reportingcompany.
• Throughanotherindividualactingasa
nominee,intermediary,custodianoragent.
Whilekeepingtheseexamplesinmind,thefollowingquestionscanhelpidentifywhattypesof
Sarerelevantforyourcompany.Acompanymayhavemorethanonetypeof
ownershipinterest.
1Thefollowing
individualsmayholdownershipinterests
inareportingcompanythroughatrustor
similararrangement:
• Atrusteeorotherindividualwiththe
authoritytodisposeoftrustassets.
• Abeneciarywhoisthesole
permissiblerecipientoftrustincome
andprincipalorwhohastherightto
demandadistributionoforwithdraw
substantiallyallofthetrustassets.
• Agrantororsettlorwhohastheright
torevokeorotherwisewithdraw
trustassets.
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Ownershipinterestquestion: Answer Ifresponseis“Yes”:
1.Doesyourcompanyissueequity,stock,orany
similarinstrumentsthatconfervotingpower?
£Yes
£No
Yourcompanyhas
ownershipinterests
thatareN
.
2.Doesyourcompanyissueanypre-
organizationcerticatesorsubscriptions?
£Yes
£No
3.Doesyourcompanyissueanytransferableshares
of,orvotingtrustcerticatesorcerticatesof
depositfor:
• anequitysecurity,
• interestinajointventure,or
• certicateofinterestinabusinesstrust?
£Yes
£No
4.Doindividualsholdcapitalorprotinterests
inyourcompany(sometimesreferredto
as“units”)?
£Yes
£No
Yourcompanyhas
ownershipinterests
thatarecapitalor
protinterests.
5.Doesyourcompanyissueanyinstruments
convertibleintoanyshare,equity,stock,voting
rights,orcapitalorprotinterest?
1Itdoesnotmatterwhetheranythingmustbe
paidtoexercisetheconversion.
£Yes
£No
Yourcompanyhas
ownershipinterests
thatareconvertible
LVV.
6.Doesyourcompanyissueanyfutureonany
convertibleinstrument?
£Yes
£No
7.Doesyourcompanyissueanywarrantorrightto
purchase,sell,orsubscribetoashareorinterest
inequity,stock,orvotingrights,orcapitalor
protinterests?
1Itdoesnotmatterifsuchwarrantorright
isadebt.
£Yes
£No
8.Doesyourcompanyissueanynon-bindingput,
call,straddle,orotheroptionorprivilegeofbuying
orsellingequity,stock,orvotingrights,capitalor
protinterest,orconvertibleinstruments?
1Optionsorprivilegescreatedbyotherswithout
theknowledgeorinvolvementofyourcompanydo
notapply.
£Yes
£No
Yourcompanyhas
ownershipinterests
thatareRLRVR
privileges.
9.Doesyourcompanyhaveanyotherinstrument,
contract,arrangement,understanding,relationship,
ormechanismtoestablishownership?
£Yes
£No
Thecatch-allownership
interestappliestoyour
company.
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CompleteStep2:Onceyouhavereviewedtheexamplesandquestionsforownershipinterests
above,youwillhaveenoughinformationtocompleteStep2(identifytheindividualswhohold
ownershipinterestsinyourcompany).Step3willhelpyouidentifywhichoftheseindividuals
ownorcontrol25percentorgreateroftheownershipinterestsinyourcompany.Theindividuals
whoownorcontrol25percentormoreoftheownershipinterestsinyourcompanywillbe
reportedasbenecialownersinyourcompany’sBOIreportunlesstheyqualifyforanexception,
asdiscussedinthenextsectionofthechapter(section2.4).
Step3:Afteridentifyingwhattypesofownershipinterestsapplytoyourcompanyandwho
ownsorcontrolsthem,youmustdeterminewhoownsorcontrols25percentormoreofthose
ownershipinterests.
IfyourcompanyhasissuedanySS:
„ Assumetheyhavebeenexercisedorconvertedinallcalculationsbelow.
IfyourcompanyissuessharesofN,isacorporation(includingaSubchapterScorporation),
orisnotacorporationbutistreatedasoneforfederalincometaxpurposes:
„ Calculateeachindividual’sownershipinterestasapercentageofthetotalsharesof
stockissued.Ifsomesharesofstockthatyourcompanyissueshavemorevotingpower
orrepresentmoreofthevalueofthecompanythanothershares(forinstance,ifyour
companyissuesbothseriesAshareswithonevotepershareandseriesBshareswithten
votespershare),youwillneedtomakethefollowingtwocalculations.Theindividual’s
ownershipinterestwillbethelargerofthetwopercentages:
Totalcombinedvotingpowerofallclasses
oftheindividual’sownershipinterests
Totaloutstandingvotingpowerofallclasses
ofownershipinterestsentitledtovote
Individual’svotingpower%
Totalcombinedvalueoftheindividual’s
ownershipinterests
Totaloutstandingvalueofallclassesof
ownershipinterests
Individual’sownershipinterestvalue%
Ifyourcompany,includingifyourcompanyistreatedasapartnershipforfederalincometax
purposes,issuescapitalorprotinterests:
„ Applythefollowingcalculation:
Individual’scapitalandprotinterests
Totaloutstandingcapitalandprotinterests
Individual’scapitalandprotinterests%
Ifnoneofthesecalculationsapplytoyourcompany:
„ Identifyanyindividualwhoownsorcontrols25percentormoreofanyclassortypeof
ownershipinterestofthecompany.
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CompleteStep3:Afteryouhaveappliedthesescenariostoyourcompany’sownershipinterests,
youwillhaveenoughinformationtoidentifytheindividualswhoownorcontrol25percentor
greateroftheownershipinterestsinyourcompany.Youmustreporttheindividualswhoownor
control25percentormoreoftheownershipinterestsinyourcompanyasbenecialownersin
yourcompany’sBOIreportunlesstheyqualifyforanexception,asdiscussedinthenextsection
ofthechapter(section2.4).
Examplesofhowtodeterminebenecialowners:
Thefollowingexamplesshowhowtodeterminebenecialownersacrossavarietyoftypesof
companystructures.Theseexamplesassumethatnoexceptionsapplytothebenecialowners,
asdiscussedinthenextsectionofthechapter(section2.4).Intheinfographicsfortheexamples,
benecialownersarenotedbycirclesandnon-benecialownersarenotedbytriangles.
Example1:Thereportingcompanyisalimitedliabilitycompany(LLC).IndividualAisthe
soleownerandpresidentofthecompanyandmakesimportantdecisionsforthecompany.No
RRRURURRUSURPSRUURUR
RURPS
IndividualAisabenecialownerofthereportingcompanyintwodierentways,assuming
nootherfacts.First,IndividualAexercisessubstantialcontroloverthecompanybecause
IndividualAisaseniorocerofthecompany(thepresident).Second,IndividualAisalso
abenecialownerbecauseIndividualAowns25percentormoreofthereportingcompany’s
ownershipinterests.
BecausenooneelseownsorcontrolsownershipinterestsintheLLCorexercisessubstantial
controloverit,andassumingtherearenootherrelevantfacts,IndividualAistheonlybenecial
ownerofthisreportingcompany,andIndividualA’sinformationmustbereportedtoFinCEN.
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Example2:Thereportingcompanyisacorporation.Thecompany’stotaloutstandingownership
interestsaresharesofstock.Threepeople(IndividualsA,B,andC)own50percent,40percent,
and10percentofthestock,respectively,andoneotherperson(IndividualD)actsasthe
SURURPSRRRR
Assumingtherearenootherrelevantfacts,IndividualsA,B,andDareallbenecialownersofthe
companyandtheirinformationmustbereported.IndividualCisnotabenecialowner.
IndividualAowns50percentofthecompany’sstockandthereforeisabenecialownerbecause50
percentisgreaterthanthethresholdof25percentormoreofthecompany’sownershipinterests.
IndividualBowns40percentofthecompany’sstockandthereforeisabenecialowner40percent
isalsogreaterthanthethresholdof25percentormoreofthecompany’sownershipinterests.
IndividualCisnotaseniorocerofthecompanyanddoesnotdirectlyorindirectlyexerciseany
substantialcontroloverthecompany.
IndividualCalsoowns10percentofthecompany’sstock,whichislessthanthe25percentor
greaterinterestneededtoqualifyasabenecialownerbyvirtueofownershipinterests.Individual
Cisthereforenotabenecialownerofthecompany.
IndividualDispresidentofthecompany.Asaseniorocerofthecompany,IndividualDexercises
substantialcontroloverthecompanyandisthereforeabenecialowner,regardlessofwhetheror
notIndividualDownsorcontrols25percentormoreofthecompany’sownershipinterests.
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Example3:ThereportingcompanyisanLLCwithtwomanagers,IndividualsAandC.
IndividualAalsoowns50percentofthe“membershipunits”intheLLCwhileIndividualCdoes
not.IndividualBownstheremainingmembershipunitsintheLLCbutisnotamanager.
Ownersofmembershipunits(whichareatypeof“capitalorprotinterest”ownershipinterest)
inanLLCaresometimescalled“members”oftheLLC.Amembermaynotautomaticallybe
required,orauthorized,tomakedecisionsfortheLLC;dependingontheinternalorganization
oftheLLC,however,amembermayalsobea“manager.”Inthisexample,IndividualAisa
memberandamanager.IndividualBisamemberbutnotamanager,whileIndividualCisa
managerbutnotamember.Allthreearebenecialownersofthereportingcompany.
IndividualAisamanageroftheLLCandowns50percentofthecompany’smembershipunits.
IndividualAexercisessubstantialcontrolovertheLLCbecauseIndividualAmakesimportant
decisionsfortheLLCintheroleofmanager.IndividualAalsoowns50percent(whichis
greaterthanthe25percentormorethreshold)ofthecompany’sownershipinterests.Individual
Aisthereforeabenecialownerofthereportingcompanyintwodierentways,byexercising
substantialcontrolandowningorcontrolling25percentormoreoftheownershipinterests.
IndividualBowns50percent(whichisgreaterthanthe25percentormorethreshold)ofthe
LLC’smembershipunits.ThatmakesIndividualBabenecialowneroftheLLCeventhough
IndividualBisnotamanageranddoesnotmakeimportantdecisionsorotherwiseexercise
substantialcontrolovertheLLC.
IndividualCisamanageroftheLLCandmakesimportantdecisionsonitsbehalf,thereby
exercisingsubstantialcontroloverit.IndividualCdoesnotownanyoftheLLC’smembership
units(theownershipinterests)butisneverthelessstillabenecialownerbecausetheindividual
exercisessubstantialcontrol.
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Example4:AreportingcompanyisacorporationwithmultipleindirectownersthroughCompany
YandCompanyZ.
Inthisexample,IndividualsA,B,C,andFarebenecialowners.
IndividualAisthereportingcompany’sChiefFinancialOcerandisthereforeaseniorocer,
whichundertheReportingRulemeansthatIndividualAexercisessubstantialcontroloverthe
company.IndividualAalsoindirectlyowns27.5percentofthereportingcompany’sstock
throughdirectownershipofCompanyYandCompanyZ,whicheachown50percentofthe
reportingcompany’sstock.(IndividualAowns30percentofCompanyY’sstockand25percent
ofCompanyZ’sstock.Therefore,IndividualAowns15percentofthereportingcompany’s
stockthroughCompanyY(50%×30%=15%)and12.5percentofthereportingcompany’s
stockthroughCompanyZ(50%×25%=12.5%).Addingthesetwopercentagestogetherequals
27.5percentofthereportingcompany’sstock.)IndividualAisthereforeabenecialownerin
twodierentways,byexercisingsubstantialcontrolandowningorcontrolling25ormoreofthe
ownershipinterestsofthereportingcompany.
IndividualBindirectlyowns35percentofthereportingcompany’sstockthroughCompany
Y,whichowns50percentofthereportingcompany’sstock.(IndividualBowns70percentof
CompanyY’sstock(50%×70%=35%)).IndividualBdoesnotexercisesubstantialcontrol.
IndividualBisabenecialownerbyowningorcontrolling25percentormoreofthereporting
company’sownershipinterests.
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IndividualCisthereportingcompany’sChiefExecutiveOcerandpresidentandistherefore
aseniorocerwhoexercisessubstantialcontrol.IndividualCindirectlyowns12.5percent
ofthereportingcompany’sstock.TocalculateIndividualC’sindirectownershipinterestsin
thereportingcompany,multiplytheownershipinterestofIndividualCinCompanyZbythe
ownershipinterestofCompanyZinthereportingcompany.IndividualCowns25percent
ofCompanyZ’sstockandCompanyZowns50percentofthereportingcompany’sstock.
Therefore,Individual’sCownershipinterestsinthereportingcompanyare12.5percent(25%
×50%=12.5%),whichislessthanthe25percentownershipinterestthreshold.Accordingly,
IndividualC’sownershipinterestsinthereportingcompanydonotmakeIndividualCa
benecialowner,butIndividualCisneverthelessabenecialownerbecauseIndividualC
exercisessubstantialcontroloverthereportingcompany.
SimilartoIndividualC,IndividualsDandEown25percentofCompanyZ’sstock,and
eachthereforeindirectlyowns12.5percentofthereportingcompany’sstock.Incontrastto
IndividualC,IndividualsDandEdonotexercisesubstantialcontroloverthereportingcompany.
IndividualsDandEarenotbenecialowners.
IndividualFisonthecompany’sboardofdirectorsandmakesimportantdecisionsonthe
reportingcompany’sbehalf,therebyexercisingsubstantialcontroloverit.IndividualFdoesnot
ownorcontrolanystockinthereportingcompany.IndividualFisthereforeabenecialowner
byexercisingsubstantialcontroloverthereportingcompany,butnotthroughholdingownership
interestsinit.
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2.4Whoqualiesforanexceptionfromthebenecial
ownerdenition?
Thereareveexceptionstothedenitionofbenecialowner.Whenanindividualwho
wouldotherwisebeabenecialownerofareportingcompanyqualiesforanexception,the
reportingcompanydoesnothavetoreportthatindividualasabenecialownerinitsBOI
reporttoFinCEN.Thefollowingcheckboxesareintendedtohelpyourcompanydetermine
whetheranyexceptionsapplytoindividualswhomightotherwisequalifyasbenecialowners
ofyourcompany.
MinorChild(Exception#1)
Anindividualqualiesforthisexceptionifthefollowingcriterionapplies:
1.Theindividualisaminorchild,asdenedunderthelawofthe
StateorIndiantribeinwhichthedomesticreportingcompanyis
createdortheforeignreportingcompanyisrstregistered.
£Yes£No
Specialruleforminorchild:Iftheansweraboveisyes,thereportingcompanymayinstead
reportinformationabouttheparentorlegalguardianoftheminorchild.
1Thisexceptiononlyappliesifaparentorlegalguardian’sinformationisreportedinlieu
oftheminorchild’sinformation.Also,whentheminorchildreachestheageofmajority,as
denedbythelawoftheStateorIndiantribeinwhichthereportingcompanywascreatedor
rstregistered,theexceptionnolongerapplies.Atthattime,iftheindividualisabenecial
owner,thereportingcompanymustleanupdatedBOIreportprovidingtheindividual’sown
information.SeeChapter6formoreinformationonwhenanupdatedreportmayberequired.
Nominee,intermediary,custodian,oragent(Exception#2)
Anindividualqualiesforthisexceptionifthefollowingcriterionapplies:
2.Theindividualmerelyactsonbehalfofanactualbenecial
ownerasthebenecialowner’snominee,intermediary,
custodian,ORagent.
1Individualswhoperformordinaryadvisoryorother
contractualservices(suchastaxprofessionals)likelyqualifyfor
thisexception.Inscenarioswherethisexceptionapplies,theactual
benecialownermuststillbereported.
£Yes£No
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Employee(Exception#3)
Anindividualqualiesforthisexceptionifallthreeofthefollowingcriteriaapply:
1.Theindividualisanemployeeofthereportingcompany,when
applyingthemeaningof“employee”providedin26CFR
54.4980H-1(a)(15).Ingeneral,thetermemployeemeansthat
anindividualissubjecttothewillandcontroloftheemployerin
whatandhowtodowork,andthattheemployermaydischarge
theindividualfromwork.
£Yes£No
2.Theindividual’ssubstantialcontrolover,oreconomicbenets
from,thereportingcompanyarederivedsolelyfromthe
employmentstatusoftheindividualasanemployee.
£Yes£No
3.Theindividualisnotaseniorocerofthereportingcompany.
Theterm“seniorocer”meansanyindividualholdingthe
positionorexercisingtheauthorityofapresident,chief
nancialocer,generalcounsel,chiefexecutiveocer,
orchiefoperatingocer,oranyotherocer,regardlessof
ocialtitle,whoperformsasimilarfunction.
£Yes£No
Inheritor(Exception#4)
Anindividualqualiesforthisexceptionifthefollowingcriterionapplies:
1.Theindividual’sonlyinterestinthereportingcompanyisa
Iinterestthrougharightofinheritance,suchasthrougha
willprovidingafutureinterestinacompany.
£Yes£No
1Oncetheindividualinheritstheinterest,thisexceptionnolongerapplies,andthe
individualmayqualifyasabenecialowner.SeeChapter6formoreinformationonwhenan
updatedreportmayberequiredinthiscircumstance.
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Creditor(Exception#5)
Anindividualqualiesforthisexceptionifthefollowingcriterionapplies:
1.Theindividualisacreditorofthereportingcompany.
Theterm“creditor”meansanindividualwhowouldmeetthe
denitionofabenecialownerofthereportingcompanysolely
throughrightsorinterestsforthepaymentofapredeterminedsum
ofmoney,suchasadebtincurredbythereportingcompany,or
aloancovenantorothersimilarrightassociatedwithsuchright
toreceivepaymentthatisintendedtosecuretherighttoreceive
paymentorenhancethelikelihoodofrepayment.
Forexample,anindividualqualiesforthecreditorexceptionif
theindividualisentitledtopaymentfromthereportingcompany
tosatisfyaloanordebt,solongasthisentitlementistheonly
ownershipinteresttheindividualhasinthereportingcompany.
£Yes£No
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Onlycertainreportingcompaniesmustincludeinformationabouttheircompanyapplicantsin
theirBOIreports.Thischapterhastwosectionstohelpyourcompanydeterminewhetherthe
requirementsapplyand,ifso,howtoidentifyitscompanyapplicants:
3.1Ismycompanyrequiredtoreportitscompanyapplicants?
3.2Whoisacompanyapplicantofmycompany?
Thischaptergenerallycovers1010.380(e),“Companyapplicant”.
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,FRTWRRWWFROFW
NotallreportingcompaniesarerequiredtoreporttheircompanyapplicantstoFinCEN.
Areportingcompanyisrequiredtoreportitscompanyapplicantsifitiseithera:
• domesticreportingcompanycreatedonorafterJanuary1,2024;or
• foreignreportingcompanyrstregisteredtodobusinessintheUnitedStatesRRDI
January1,2024.
Areportingcompanyisnotrequiredtoreportitscompanyapplicantsifitiseithera:
• domesticreportingcompanycreatedbeforeJanuary1,2024;or
• foreignreportingcompanyrstregisteredtodobusinessintheUnitedStatesbefore
January1,2024.
Chart5–Companyapplicantreportingrequirement
Thespecialruleconcerningcompanyapplicantreportingcanbefoundat1010.380(b)(2)(iv)
andisdiscussedfurtherinthenextchapter(section4.2).
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RFROFWRIFR
Eachreportingcompanythatisrequiredtoreportcompanyapplicantswillhavetoidentifyand
reporttoFinCENatleastonecompanyapplicant,andatmosttwo.Allcompanyapplicantsmust
beindividuals.CompaniesorlegalentitiesFDRbecompanyapplicants.
Therearetwocategoriesofcompanyapplicants–the“directler”andtheindividualwho
“directsorcontrolsthelingaction.”
• Therstcategory(directler)mustbeidentiedbyallreportingcompaniesthathavea
companyapplicantreportingrequirement.
• Thesecondcategory(directsorcontrolsthelingaction)maynotbeapplicableto
allreportingcompaniesthathaveacompanyapplicantreportingrequirement.The
secondcategoryofcompanyapplicantsisonlyrequiredtobereportedwhenmore
thanoneindividualisinvolvedinthelingofthedocumentthatcreatedorrst
registeredthecompany.
• Ifmorethanoneindividualisinvolvedintheling,thentwocompanyapplicantsmust
bereported.
• Noreportingcompanywillhavemorethantwocompanyapplicants.
CompanyApplicantCategory1:Directler
Thisistheindividualwhodirectlyledthedocumentthatcreatedadomesticreportingcompany,
ortheindividualwhodirectlyledthedocumentthatrstregisteredaforeignreporting
company.Thisindividualwouldhaveactuallyphysicallyorelectronicallyledthedocument
withthesecretaryofstateorsimilaroce.
CompanyApplicantCategory2:Directsorcontrolsthelingaction
Theotherpossiblecompanyapplicantistheindividualwhowasprimarilyresponsiblefor
directingorcontrollingthelingofthecreationorrstregistrationdocument.Thisindividual
isacompanyapplicanteventhoughtheindividualdidnotactuallylethedocumentwiththe
secretaryofstateorsimilaroce.
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Thefollowingchartmayassistyourcompanyinidentifyingcompanyapplicants.
Chart6–Companyapplicationdenition
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Thefollowingexamplesillustratehowtoidentifycompanyapplicantsincommoncompany
creationorregistrationscenarios.
Example1:IndividualAiscreatinganewcompany.IndividualApreparesthenecessary
documentstocreatethecompanyandlesthemwiththerelevantStateorTribaloce,eitherin
personorusingaself-serviceonlineportal.Nooneelseisinvolvedinpreparing,directing,or
makingtheling.
IndividualAisacompanyapplicantbecauseIndividualAdirectlyledthedocumentthatcreated
thecompany.BecauseIndividualAistheonlypersoninvolvedintheling,IndividualAis
theonlycompanyapplicant.StateorTribalemployeeswhoreceiveandprocessthecompany
creationorformationdocumentsshouldnotbereportedascompanyapplicants.
Example2:IndividualAiscreatingacompany.IndividualApreparesthenecessarydocuments
tocreatethecompanyanddirectsIndividualBtolethedocumentswiththerelevantStateor
Tribaloce.IndividualBthendirectlylesthedocumentsthatcreatethecompany.
IndividualsAandBarebothcompanyapplicants–IndividualBdirectlyledthedocuments,
andIndividualAwasprimarilyresponsiblefordirectingorcontrollingtheling.IndividualB
could,forexample,beIndividualA’sspouse,businesspartner,attorney,oraccountant;inall
cases,IndividualsAandBarebothcompanyapplicantsinthisscenario.
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ThischaptercoverswhatinformationneedstobeincludedinaBOIreporttoFinCEN.BOI
reportsrequirespecicpiecesofinformationaboutyourcompany,itsbenecialowners,and,
inthecasesdescribedinsection3.1,itscompanyapplicants.Additionally,thischaptercovers
whatinformationneedstobeprovidedtoobtainaFinCENidentier.Thepersonsubmitting
informationtoFinCENmustcertifythatitistrue,correct,andcomplete.Thischapterincludes
thefollowingsections:
4.1WhatinformationshouldIcollectaboutmycompany,itsbenecialowners,andits
companyapplicants?
4.2WhatdoIreportifaspecialreportingruleappliestomycompany?
4.3WhatisaFinCENidentierandhowcanIuseit?
Thischaptergenerallycovers1010.380(b),“Content,form,andmannerofreports”.
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WIRWRRO,FROOFWRWFRW
benecialowners,anditscompanyapplicants?
Thefollowingchecklistsmayhelpyouidentifytheinformationaboutyourcompanyandits
benecialownersandcompanyapplicantsthatyouarerequiredtocollectandreport.
Chart7–Requiredinformationchecklists
RWR
)DD
UDDUEDD
»SRUDUDDRU
SFUUDU
»SRUDURSUFSDSDFRDRUUSRU
FRSDSUFSDSDFRRDSUDURFDR
DUFRSDFRF
DUEDUUUFUD
RIRRWFRRODUUEDjurisdictionofrstregistration
InternalRevenueService(IRS)TaxpayerIdenticationNumber(TINFD(SU
IdenticationNumber(EIN))
»,IIRRWFRRW,1,reportataxidentication
EUEDUUFDDFUF
EachBenecialOwnerandCompanyApplicant
RDUSRUFRSDDUUTURUSRURUDRDRFRSDDSSFD
DSURUDDFURUFRSDUTURUSRUFRSD
DSSFDRUDR
)DD
DEU
SFUUDU
»SRUDUDUDUFSRUFRSDDSSFDRRU
RUUUDFRSDFRURUFDSDUDDRUFD
USRUUDUDURUTURD
TEUDUFUDDR
SUF
»SDSU
»DUUF
»Identicationdocumentissuedbyastate,localgovernment,ortribe
»,IORRWRIWRRFWUSDSU
IfanindividualhasobtainedaFinCENidentierandprovidedittoareportingcompany,thereportingcompany
mayincludesuchFinCENidentierinitsreportinsteadoftheinformationrequiredabouttheindividual.
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WR,RWIFORWOOWR
FR
TheReportingRuleincludesfourspecialreportingrulesthatmayaectyourcompany’s
reportingobligations.
1. Ownedbyexemptentity:Youdonotneedtoreportinformationaboutanybenecialowner
whoseownershipinterestsinareportingcompanyareheldthroughoneormoreentities,all
ofwhicharethemselvesexemptfromthereportingcompanydenition.RefertoChapter1.2
forthetypesofentitiesthatareexemptfromthereportingcompanydenition.
„ Ifthisspecialruleapplies,thenyoumayreportthenamesofalloftheexemptentities
insteadofinformationabouttheindividualwhoisabenecialownerofyourcompany
throughownershipinterestsinthoseexemptentities.
Example:Alargeoperatingcompanyowns50%oftheownershipinterestsinyour
company.Largeoperatingcompaniesareexemptfromthereportingcompanydenition
Exemption#21).IndividualAowns50%ofthelargeoperatingcompany,andtherefore
owns25%oftheownershipinterestsinyourcompany(50%×50%=25%).Youmayreport
thenameofthelargeoperatingcompanyinsteadofIndividualA’spersonalinformation.
2. Minorchild:Youdonotneedtoreportinformationaboutabenecialownerofthereporting
companywhoisaminorchild,providedyouhavereportedtherequiredinformationabout
theminorchild’sparentorlegalguardian.
„ Ifthisspecialruleapplies,youmayreporttherequiredinformationaboutthechild’s
parentorlegalguardianinsteadofthechild.
1Ifyoureportaparentorlegalguardian’sinformationinsteadofaminorchild’s
information,thenyoumustindicateinyourBOIreportthattheinformationrelatestoa
parentorlegalguardianoftheminorchild.
3. Foreignpooledinvestmentvehicle:Youdonotneedtoreportinformationabouteach
benecialownerandcompanyapplicantifyourcompanywasformedunderthelawsofa
foreigncountryandwouldbeareportingcompanyifnotforthepooledinvestmentvehicle
exemption(Exemption#18).
„ Ifthisspecialruleapplies,youmustreportoneindividualwhoexercisessubstantialcontrol
overthecompany.Youdonotneedtoreportanycompanyapplicants.Ifmorethanone
individualexercisesubstantialcontroloverthecompany,youmustreportinformationabout
theindividualwhohasthegreatestauthorityoverthestrategicmanagementofthecompany.
4. Companyapplicantreportingforexistingcompanies:Ifthereportingcompanywascreated
orregisteredbeforeJanuary1,2024,youdonotneedtoreportanycompanyapplicant
informationforthereportingcompany.
„ Ifthisspecialruleapplies,donotreportcompanyapplicants.SpecifyontheBOIreport
thatthecompanywascreatedorregisteredbeforeJanuary1,2024.
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4.3WhatisaFinCENidentierandhowcanIuseit?
A“FinCENidentier”isauniqueidentifyingnumberthatFinCENwillissuetoanindividual
orreportingcompanyuponrequestaftertheindividualorreportingcompanyprovidescertain
informationtoFinCEN.
• AnindividualorreportingcompanyisnotrequiredtoobtainaFinCENidentier.
• AnindividualorreportingcompanymayonlyreceiveoneFinCENidentier.
• YourcompanymayincludeFinCENidentiersinitsBOIreportinsteadofcertain
requiredinformationaboutbenecialownersorcompanyapplicants.
FinCENIdentiersforIndividuals
IndividualsmayelectronicallyapplyforFinCENidentiers.Intheapplication,anindividual
mustprovidetheirname,dateofbirth,address,uniqueidentifyingnumberandissuing
jurisdictionfromanacceptableidenticationdocument,andanimageoftheidentication
document–thesamefourpiecesofpersonalinformationandimagereportingcompaniessubmit
aboutbenecialownersandcompanyapplicantsinBOIreports(section4.1).Afteranindividual
submitsanapplication,theindividualwillimmediatelyreceiveaFinCENidentieruniqueto
thatindividual.
OnceabenecialownerorcompanyapplicanthasobtainedaFinCENidentier,reporting
companiesmayreportitinplaceoftheotherwiserequiredfourpiecesofpersonalinformation
abouttheindividualinBOIreports.
FinCENIdentiersforReportingCompanies
YourcompanymayrequestaFinCENidentierwhenitsubmitsaBOIreportbycheckingabox
onthereportingform.
UpdatesorCorrections
WhentheinformationanindividualorreportingcompanyreportedtoFinCENtoobtaina
FinCENidentierchanges,orwhentheindividualorreportingcompanydiscoversthatreported
informationisinaccurate,theindividualorreportingcompanymustupdateorcorrectthe
reportedinformation,asapplicable.SeeChapter6formoreinformationontheupdateand
correctionrequirements,includingtimelines.
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TheReportingRuleiseectiveonJanuary1,2024.FinCENwillbeginacceptingBOIreports
electronicallythroughitssecurelingsystemonthisdate.BOIreportswillnotbeacceptedprior
toJanuary1,2024.ThischapterexplainswhenyourcompanyshouldleitsinitialBOIreport
andhowtodosointhefollowingtwosections:
5.1WhenshouldmycompanyleitsinitialBOIreport?
5.2HowdoesmycompanyleaBOIreport?
SUURUPRUSRU
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5.1WhenshouldmycompanyleitsinitialBOIreport?
IfyourcompanyalreadyexistsasofJanuary1,2024,itmustleitsinitialBOIreportbyJanuary
1,2025.IfyourcompanyiscreatedorregisteredtodobusinessintheUnitedStatesonorafter
January1,2024,andbeforeJanuary1,2025,itwillhave90calendardaysafterreceivingactual
orpublicnoticethatthecompany’screationorregistrationiseectivetoleitsinitialBOI
report.Specically,this90-calendardaydeadlinerunsfromthetimethecompanyreceives
actualnoticethatitscreationorregistrationiseective,orafterasecretaryofstateorsimilar
ocerstprovidespublicnoticeofitscreationorregistration,whicheverisearlier.Ifyour
companyiscreatedorregisteredonorafterJanuary1,2025,itwillhave30calendardaysfrom
actualorpublicnoticethatitscreationorregistrationiseectivetoleitsinitialBOIreport.For
example,yourcompanymayreceiveactualnoticethatitscreationorregistrationiseective
throughadirectcommunicationfromthesecretaryofstateorsimilaroce.Yourcompanycould
alsoreceivepublicnoticethatitscreationorregistrationiseectivebecauseitappearsona
publiclyaccessibleregistrymaintainedbythesecretaryofstateorsimilaroce.Noticepractices
willvarybyjurisdiction.Ifajurisdictionprovidesbothactualandpublicnotice,thetimelinefor
whenaninitialBOIreportisduestartsontheearlierofthetwodatesnoticeisreceived.
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3URPSUSRURPS:Ifyourcompanypreviouslyqualiedforanexemption
tothereportingcompanydenitionbutnolongerqualies,youarerequiredtoleaBOIreport
within30calendardaysofthedateonwhichyourcompanystopsqualifyingfortheexemption.
Refertosection1.2ofthisGuideforadditionalinformationonexemptionsfromthe
reportingrequirements.
5.2HowdoesmycompanyleaBOIreport?
IfyourcompanyisrequiredtoleaBOIreport,youmustdosoelectronicallythroughasecure
lingsystem.
• FinCEN’slingsystemiscurrentlyunderdevelopmentandwillnotbeavailableuntil
January1,2024.
• FinCENwillnotacceptBOIreportsbeforeJanuary1,2024.
• FinCENwillpublishinstructionsandothertechnicalguidanceonhowtocompletethe
BOIreportform.Thisguidancewillbeavailableat:www.ncen.gov/boi.
1Theremaybecertaincircumstancesinwhichareportingcompanyisunableto
electronicallyleaBOIreportthroughFinCEN’ssecurelingsystem.Inthosecases,the
reportingcompanyshouldcontactFinCEN:www.ncen.gov/contact.
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InadditiontolinganinitialBOIreport,reportingcompaniesmustalsoupdateandcorrect
informationintheirpreviouslyledBOIreports.IndividualswhoobtainFinCENidentiers
mustalsoupdateandcorrectinformationpreviouslyreportedtoFinCEN.Thischapterdiscusses
whattodowhentherearechangestoorinaccuraciesinreportedinformationinthefollowing
sections:
6.1WhatshouldIdoifpreviouslyreportedinformationchanges?
6.2WhatshouldIdoifIlearnofaninaccuracyinareport?
6.3Whatshouldmycompanydoifitbecomesexemptafteralreadylingareport?
Thischaptergenerallycovers1010.380(b)(3),“Contentsofupdatedorcorrectedreports”.
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WRO,RIRORWIRWRF
IfthereisDDtotherequiredinformationaboutyourcompanyoritsbenecialowners
inaBOIreportthatyourcompanyled,yourcompanymustleanupdatedBOIreportnolater
than30daysafterthedateonwhichthechangeoccurred.Thesame30-daytimelineapplies
tochangesininformationsubmittedbyanindividualinordertoobtainaFinCENidentier.
Areportingcompanyisnotrequiredtoleanupdatedreportforanychangestopreviously
reportedpersonalinformationaboutacompanyapplicant.
ThefollowingaresomeexamplesofchangesthatwouldrequireanupdatedBOIreport:
• Anychangetotheinformationreportedforthereportingcompany,suchasregisteringa
newDBA.
• Achangeinbenecialowners,suchasanewChiefExecutiveOcer,asalethat
changeswhomeetstheownershipinterestthresholdof25percent,orthedeathofa
benecialowner.
1Whenabenecialownerdies,resultinginchangestothereportingcompany’s
benecialowners,reportthosechangeswithin30daysofwhenthedeceasedbenecial
owner’sestateissettled.Theupdatedreportshould,totheextentappropriate,identify
anynewbenecialowners.
• Anychangetoabenecialowner’sname,address,oruniqueidentifyingnumber
providedinaBOIreport.
1Ifabenecialownerobtainedanewdriver’slicenseorotheridentifyingdocument
thatincludesthechangedname,address,oridentifyingnumber,thereportingcompany
alsowouldhavetoleanupdatedbenecialownershipinformationreportwithFinCEN,
includinganimageofthenewidentifyingdocument.
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SDKeepinmindtheupdaterequirementrelatedtothespecialreportingrulefor
aminorchild.Whenabenecialownerthatwasaminorchildreachestheageofmajority,
youmustleanupdatedBOIreport,identifyingtheindividualasabenecialownerand,if
warranted,replacingtheirparentorlegalguardian’sinformationwiththeirown.
LikeinitialBOIreports,updatedBOIreportsshouldbeledelectronicallythoughthesecure
lingsystem.
1Thereisnorequirementtoreportacompany’sterminationordissolution.
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WRO,RI,ORIFFFRW
IfaninaccuracyisidentiedinaBOIreportthatyourcompanyled,yourcompanymust
correctitnolaterthan30daysafterthedateyourcompanybecameawareoftheinaccuracyor
hadreasontoknowofit.Thisincludesanyinaccuracyintherequiredinformationprovided
aboutyourcompany,itsbenecialowners,oritscompanyapplicants.Thesame30-day
timelineappliestoinaccuraciesininformationsubmittedbyanindividualinordertoobtaina
FinCENidentier.
1TherearenopenaltiesforlinganinaccurateBOIreportprovideditiscorrectedwithin90
calendardaysofwhenitwasled.
CorrectedBOIreportsshouldbeledelectronicallythoughthesecurelingsystem.
WROFRRIWFRWIW
alreadylingareport?
IfyourcompanyledaBOIreportandlaterqualiesforanexemptionfromthereporting
requirements,yourcompanyshouldleanupdatedBOIreporttoindicatethatitisnewly
exemptfromthereportingrequirements.Refertosection1.2ofthisGuideforinformationon
exemptions.
UpdatedBOIreportsshouldbeledelectronicallythoughthesecurelingsystem.An
updatedBOIreportforanewlyexemptentitywillonlyrequirethat:(1)theentityidentify
itself;and(2)checkaboxnotingitsnewlyexemptstatus.
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AppendixA-GuideandRegulationReferencePage
ThisindexshowswherethedierentpartsoftheReportingRule(1010.380)arecoveredinthis
Guide.TheleftsideoftheindexshowseachdierentparagraphoftheReportingRuleand
itstitle.TherightsideoftheindexshowswhatpartofthisGuidecoversthatparagraphofthe
ReportingRule.YoucanclickonthehyperlinksontherighttojumptothepartofthisGuide.
SomeoftheReportingRuleparagraphsarementionedinmorethanoneplaceinthisGuide.
Mentionsoftheparagraphsareincludedintheindexintheparenthesesontheright.
(a)Reportsrequired;timingofreporting...........................................Chapter5DGChapter6
(1)Initialreport..........................................................................................................................5.1
(2)Updatedreport......................................................................................................................6.1
(3)Correctedreport....................................................................................................................6.2
(b)Content,form,andmannerofreports..........................................Chapter4andChapter6
(1)Initialreport.......................................................................................................................4.1
(2)Specialrules
(i)Reportingcompanyownedbyexemptentity.....................................................................4.2
(ii)Minorchild................................................................................4.2(mentionin2.4and6.1)
(iii)Foreignpooledinvestmentvehicle............................. 4.2(mentionin1.2Exemption#18)
(iv)Companyapplicantforexistingcompanies..........................................4.2(mentionin3.1)
(3)Contentsofupdatedorcorrectedreports
(i)Updatedreports—ingeneral..............................................................................................6.1
(ii)Updatedreports—newlyexemptentities..........................................................................6.3
(iii)Correctedreports..............................................................................................................6.2
(4)FinCENidentier
(i)Application.........................................................................................................................4.3
(ii)UseoftheFinCENidentier.............................................................................................4.3
(iii)Updatesandcorrections...........................................................4.3(mentionin6.1and6.2)
(c)Reportingcompany.................................................................................................. Chapter1
(1)Denitionofreportingcompany..........................................................................................1.1
(2)Exemptions...........................................................................................................................1.2
(i)Securitiesreportingissuer.......................................................................... 1.2Exemption#1
(ii)Governmentalauthority............................................................................. 1.2Exemption#2
(iii)Bank.........................................................................................................1.2Exemption#3
(iv)Creditunion.............................................................................................. 1.2Exemption#4
(v)Depositoryinstitutionholdingcompany................................................... 1.2Exemption#5
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(vi)Moneyservicesbusiness.......................................................................... 1.2Exemption#6
(vii)Brokerordealerinsecurities................................................................... 1.2Exemption#7
(viii)Securitiesexchangeorclearingagency................................................. 1.2Exemption#8
(ix)OtherExchangeActregisteredentity....................................................... 1.2Exemption#9
(x)Investmentcompanyorinvestmentadviser............................................ 1.2Exemption#10
(xi)Venturecapitalfundadviser................................................................... 1.2Exemption#11
(xii)Insurancecompany................................................................................ 1.2Exemption#12
(xiii)State-licensedinsuranceproducer........................................................ 1.2Exemption#13
(xiv)CommodityExchangeActregisteredentity......................................... 1.2Exemption#14
(xv)Accountingrm..................................................................................... 1.2Exemption#15
(xvi)Publicutility......................................................................................... 1.2Exemption#16
(xvii)Financialmarketutility....................................................................... 1.2Exemption#17
(xviii)Pooledinvestmentvehicle.................................................................. 1.2Exemption#18
(xix)Tax-exemptentity................................................................................. 1.2Exemption#19
(xx)Entityassistingatax-exemptentity....................................................... 1.2Exemption#20
(xxi)Largeoperatingcompany..................................................................... 1.2Exemption#21
(xxii)Subsidiaryofcertainexemptentities.................................................. 1.2Exemption#22
(xxiii)Inactiveentity..................................................................................... 1.2Exemption#23
(d)Benecialowner....................................................................................................... Chapter2
(1)Substantialcontrol
(i)Denitionofsubstantialcontrol...................................................2.1(mentionin2.3Step1)
(ii)Directorindirectexerciseofsubstantialcontrol................................................... 2.3Step1
(2)Ownershipinterests
(i)Denitionofownershipinterest...................................................2.2(mentionin2.3Step2)
(ii)Ownershiporcontrolofownershipinterest.......................................................... 2.3Step2
(iii)Calculationofthetotalownershipinterestsofareportingcompany................... 2.3Step3
(3)Exceptions............................................................................................................................2.4
(e)Companyapplicant...............................................................................................................3.2
(f)Denitions
(1)Employee..............................................................................................................................2.4
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(2)FinCENidentier.................................................................................................................4.3
(3)Foreignperson............................................................................................ 1.2Exemption#23
(4)Indiantribe................................................... 1.1(mentionin1.2Exemption#2;2.4;and4.1)
(5)Lawfullyadmittedforpermanentresidence.............................................. .1.2Exemption#20
(6)Operatingpresenceataphysicalocewithin
theUnitedStates.........................................................1.2Exemption#13andExemption#21
(7)Pooledinvestmentvehicle............................................... 1.2Exemption#18(mentionin4.2)
(8)Seniorocer.............................................................................. 2.1(mentionsin1.3and2.3)
(9)State............................. 1.1(mentionin1.2Exemption#2;1.2Exemption#13;2.4;and4.1)
(10)UnitedStatesperson.............................. Mentionin1.2Exemption#20andExemption#23
(g)Reportingviolations..............................................................................................................1.3
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About the Panelists…
Nicol D. Bell is an elder law and estate planning attorney with The Wacks Law Group with
offices in Whippany, New Jersey, and New York City. She helps her clients develop
comprehensive estate plans including Wills, Powers of Attorney, advanced health care
directives (living wills) and trusts; and also assists with estate administration, guardianships and
long-term care planning.
Admitted to practice in New Jersey, Ms. Bell serves as a Trustee and Tenant Liaison to the John
P. Renna Senior Building, as Vice Chair of West Orange’s Older Adult Advisory Board and as a
member of the West Orange Chamber of Commerce. She was originally a family law attorney,
worked briefly as a defense attorney for an insurance company and then transitioned to the
financial services industry as a regulator with NASD and as a compliance officer for a
preeminent, international wealth management firm.
Ms. Bell received her B.A. from Douglass College, Rutgers University, and her J.D. from
Rutgers Law School.
Sean Benoit is Director of Litigation, Community Health Law Project (CHLP), in South Orange,
New Jersey. He joined CHLP in 2019 as a Staff Attorney in the Union/Hudson Regional Office
and rose to Managing Attorney for that office in 2021 before becoming Director of Litigation in
2024.
Prior to joining CHLP Mr. Benoit spent 9 years as a legal advocate for individuals with
disabilities, specifically on helping children and families with special education legal issues. He
is a former elected Councilman for the Borough of Garwood.
Mr. Benoit received his B.A. from Boston College and his J.D. from Rutgers Law School.
Melanie R. Costantino is in private practice at the Law Offices of Melanie R. Costantino in
Hackensack, New Jersey, a general practice firm with a focus in elder law, including
guardianships, Medicaid applications and appeals, and estate administration. She has received
numerous judicial appointments to serve in guardianships, special medical guardianships and
estate and trust matters in Bergen, Essex, Hudson, Passaic, Union and Hunterdon Counties.
Ms. Costantino also has experience with commercial and complex litigation, including matters
concerning collections and judgment execution, healthcare law, foreclosures, real estate,
fraudulent conveyances, bankruptcy and secured/unsecured interests. Prior to forming her own
firm she was an associate attorney for two general practice Bergen County law firms, and at a
New York law firm, where her practice focused on collection matters for health care institutions.
Ms. Costantino is admitted to practice in New Jersey and New York, and before the United
States District Court for the District of New Jersey and the Eastern District of New York. She is
a member of the New Jersey Bar Association and its Elder Law and Young Lawyer Sections, as
well as the Bergen County Bar Association. She has sat on the Board of the New Jersey
chapter of the National Association of Elder Law Attorneys (NAELA), has served on the District
IIA Fee Arbitration Committee and was selected for the Early Settlement Panel, Essex County
Probate Part.
299
Ms. Costantino received her J.D. from Fordham University School of Law.
Crystal West Edwards, Certified as an Elder Law Attorney by the ABA-accredited National
Elder Law Foundation, is a Principal of Porzio Bromberg & Newman P.C. in Morristown, New
Jersey. She primarily focuses her practice in elder law, special needs planning and advocacy,
estate planning and estate administration. She assists seniors, individuals with special needs
and their families with complex estate and tax planning, asset preservation, eligibility for means-
tested government benefits, fiduciary appointments, and representation and advocacy.
Ms. Edwards is admitted to practice in New Jersey and Pennsylvania, and before the United
States District Court for the District of New Jersey and the United States Court of Appeals for
Veterans’ Claims. A Fellow of the American College of Trust and Estate Counsel (ACTEC), she
is a member of the New Jersey State Bar Association Elder and Disability Law Section and
Diversity Committee, a former member of the Board of Directors of the National Academy of
Elder Law Attorneys (NAELA) and Past President of the Garden State Bar Association. She is
Past President of the New Jersey Chapter of NAELA and has served on the Young Lawyers and
Associates Committee of the NJSBA Elder and Disability Law Section.
A former adjunct faculty member at Kean University, Ms. Edwards was honored by the State of
New Jersey with a Senate Resolution for “her meritorious history of professional leadership and
exemplary dedication.” She has lectured statewide on elder law topics and was the recipient of
ICLE’s Distinguished Service Award and the 2014 Young Lawyer Award from the Garden State
Bar Association for her “exceptional commitment to the GSBA, the Community & the Elder and
Disability Law Bar.”
Ms. Edwards received her B.S., cum laude, from the University of North Carolina at Charlotte
and her J.D. from Pennsylvania State University’s Dickinson School of Law.
Erika Kerber is President/Executive Director of the Community Health Law Project (CHLP) in
South Orange, New Jersey, a nonprofit legal services organization that has provided legal and
advocacy services to low-income New Jersey residents living with disabilities for more than 48
years. She has been with CHLP for more than 20 years, initially serving as Supervising
Attorney of its Monmouth/Ocean Office, as Managing Attorney of that office, as Director of
Litigation and as Associate Executive Director before being appointed as President/Executive
Director in 2022.
Ms. Kerber sits on the Boards of the New Jersey Association of Mental Health and Addiction
Agencies and the New Jersey Mental Health Institute, and is a member of the New Jersey
Mental Health Coalition and the NJ Statewide Network for Cultural Competence. Prior to joining
CHLP she practiced family law at Northeast New Jersey Legal Services and litigated child
welfare cases while working for the City of New York.
Ms. Kerber received her undergraduate degree from the NYU Leonard N. Stern School of
Business and her law degree from Benjamin N. Cardozo School of Law.
Constantina Koulosousas, Certified as an Elder Law Attorney by the ABA-accredited National
Elder Law Foundation, is an attorney with Edward Wacks & Associates, LLC in Whippany, New
300
Jersey, where she concentrates her practice in elder law and trusts and estates, with a portion
of her practice focusing on the particular needs of Greek-American families. She assists her
clients with estate planning & administration, guardianships, planning for individuals with special
needs, asset preservation and probate litigation, as well as residential and commercial real
estate and healthcare law. She has served as court-appointed attorney and guardian for
disabled individuals and advises her clients with respect to Medicaid, Social Security and VA
matters, and is able to assist in the application process for these benefits, and is a Department
of Veterans Affairs Accredited Attorney.
Admitted to practice in New York and New Jersey, Ms. Koulosousas has been a member of the
American, New Jersey State and Passaic County Bar Associations and the Morris County
Chamber of Commerce. She has served as Secretary of the Hellenic Federation of New Jersey
and the Association of Greek American Professional Women, and on the Board of the Mental
Health Association of Morris County. Fluent in Greek, she lectures to small groups of potential
clients, CPAS and financial advisors on asset preservation, estate planning and long-term care
planning.
Ms. Koulosousas received her B.S., cum laude, from Fairfield University, where she was elected
to Sigma Iota Rho, and her J.D., with a concentration in health law, from Seton Hall Law School,
where she was a member of the Civil Litigation Clinic and a contributing writer to the Health Law
Outlook. She interned at the Department of Justice, Office of International Affairs, in
Washington, D.C.
Lauren S. Marinaro is a Partner in Fink Rosner Ershow-Levenberg Marinaro LLC in Clark, New
Jersey, and focuses her practice in elder and disability law matters including estate planning,
guardianship, Medicaid Asset preservation planning, Medicaid fair hearings, estate
administration, and estate and fiduciary litigation. She has also been an Accredited Veterans
Attorney (pension benefits).
Admitted to practice before the United States District Court for the District of New Jersey, Ms.
Marinaro is Past Chair of the New Jersey State Bar Association Elder & Disability Law Section
and has been President of the National Academy of Elder Law Attorneys New Jersey Chapter
(NAELA-NJ). She is a member of NAELA’s Board of Directors and Co-Chair of the NAELA
Public Policy Steering Committee.
Ms. Marinaro has lectured for ICLE, NAELA and at county and state bar events on topics
including elder law case updates, New Jersey power of attorney issues, psychiatric advance
directives and the Medicaid Global Options for Long-Term Care programs. She has also
lectured on developments in Olmstead-related case law, mental health parity, and Medicaid
home and community-based services for married couples at national conferences.
Ms. Marinaro received her B.A. and M.P.A.P. from Rutgers University, and her J.D. and LL.M. in
Elder Law from the University of Kansas School of Law.
Gary Mazart is a Trusts and Estates Partner in Schenck, Price, Smith & King, LLP in Florham
Park, Paramus and Sparta, New Jersey. He is Co-Chair of the firm’s Estate, Gift and Charitable
Planning Practice Group and a member of the Elder and Special Needs Law Practice Group.
His major focus has been in estate tax planning, particularly lifetime and disability planning for
aging, Illness, incapacity and the costs of long-term health care.
301
Past Chair of the New Jersey State Bar Association’s Elder and Disability Law Section, Mr.
Mazart is a founding member of the National Academy of Elder Law Attorneys (NAELA), Past
Chair of the Academy’s Tax Special Interest Group and former Vice-Chair of the New Jersey
Chapter of NAELA. He is a former Consultor to the New Jersey State Bar Association Real
Property, Probate and Trust Law Section and has been a member of the Northern New Jersey
Estate Planning Council, the Guardianship Association of New Jersey, Inc. and the Special
Needs Alliance. Mr. Mazart is a former Board Chair of the Community Health Law Project and a
former member of the National and New Jersey Chapter Boards of the Alzheimer’s Association,
where he has served on the New Jersey Chapter Advisory Board. He was elected a Fellow of
the American College of Trust and Estate Counsel (ACTEC) in 1999.
Mr. Mazart was selected by the ABA Young Lawyers Division as one of the “Twenty Young
Lawyers Who Make a Difference.” He writes extensively on estate and disability planning
topics, and is the editor of and contributing author to New Jersey Elder and Disability Law
Practice (ICLE). A former legal correspondent to News 12, he is a regular lecturer to
professional and civic groups on estate tax, lifetime and disability planning issues.
Mr. Mazart received his B.A. from Harpur College, Binghamton University, and his J.D. from
Benjamin N. Cardozo School of Law.
Ryann M. Siclari, Certified as an Elder Law Attorney by the ABA-accredited National Elder Law
Foundation, is counsel to Porzio, Bromberg & Newman, P.C. in Morristown, New Jersey, where
she concentrates her practice primarily in elder and disability law, including long-term care,
government benefits planning and advocacy, estate and trust administration, and estate planning.
She counsels the aging and disabled or their families regarding the goals of having sufficient
health care coverage, the ability to age in place and preserving assets against possible long-term
care costs.
Admitted to practice in New Jersey and Pennsylvania, and before the United States District Court
for the District of New Jersey, Ms. Siclari is also a Veterans Administration Accredited Attorney.
She is Past Chair of the New Jersey State Bar Association’s Elder Law Section, where she has
also served as Roundtable and Legislative Coordinator, and is a former Trustee of the New Jersey
Chapter of the National Academy of Elder Law Attorneys (NAELA). She has lectured on elder law
topics to attorneys and community organizations.
Ms. Siclari received her B.A., magna cum laude, from the University of Alaska, Fairbanks, and her
J.D., magna cum laude, from Widener University School of Law, where she was Styles Editor of
The Delaware Journal of Corporate Law and the recipient of the Dean’s and Outstanding Service
Awards. She received her LL.M. in Elder Law, with Distinction, from Stetson University College of
Law.
Sarah G. Townsend is an associate with Schenck, Price, Smith & King, LLP with offices in
Florham Park, Sparta and Paramus, New Jersey, and New York City. A member of the firm’s
Estate, Gift & Charitable Planning, and Elder and Special Needs Planning Groups, she
concentrates her practice in estate planning and estate administration.
Ms. Townsend is admitted to practice in New Jersey. Prior to joining Schenck Price Smith & King
she was an attorney in the tax, trusts and estates department of a well-known law firm.
302
Ms. Townsend received her B.A.’s, with highest distinction, from the Pennsylvania State University
and her J.D. from Rutgers Law School-Newark, where she was Editor-in-Chief of the Rutgers
University Law Review. She was a judicial intern to the Honorable Esther Salas, United States
District Court for the District of New Jersey, and was also an Appellate Section Intern at the New
Jersey Office of the Attorney General.
Jordan Wassel is counsel to Schenck, Price, Smith & King, LLP with offices in Florham Park,
Paramus and Sparta, New Jersey; and New York City. He assists clients with the development of
their estate plans, including the preparation of general durable powers of attorney, advance
directives, last Wills and testaments, revocable living trusts and life insurance trusts. He also
assists clients with estate and trust administration, including probate matters, and with the
preparation of federal and New Jersey estate and inheritance tax returns.
Admitted to practice in New Jersey and Maryland, Mr. Wassel ha been a member of the New
Jersey State Bar Association and the Estate Planning Council of Northern New Jersey. He is co-
author of The Affordable Care Act and Your 2016 Income Tax Return and “New Jersey Death
Tax Returns and Issues Related to Taxation of Special Needs and Supplemental Benefits
Trusts” (2015 ICLE Elder Law Retreat). Prior to joining Schenck, Price, Smith & King, he
worked at the Baltimore County Register of Wills.
Mr. Wassel received his B.A. from the University of Maryland and his J.D. from the University of
Baltimore School of Law.
Deirdre R. Wheatley-Liss, Certified as an Elder Law Attorney by the National Elder Law
Foundation, is a Partner in Porzio, Bromberg & Newman, P.C. with offices in Morristown and
Princeton, New Jersey; and New York City. She concentrates her practice in asset protection
planning taxation, estate planning and administration, and elder law, as well as representing
closely-held businesses and non-profit organizations. She has experience in Medicaid, retirement
benefits, probate and Will contest litigation, and guardianships and advocacy for the elderly and
disabled.
Admitted to practice in New Jersey and New York, Ms. Wheatley-Liss has been a member of the
New Jersey State, New York State and Morris County Bar Associations, the International
Academy of Collaborative Professionals and the New Jersey Collaborative Law Group. She
has been a member of the Board of Directors of the Morris County Chamber of Commerce,
Chair of the Morris Members Committee and Chair of the Elder Law Committee of the Morris
County Bar Association. She has served as Vice Chair of the Tax Section Steering Committee
of the National Academy of Elder Law Attorneys (NAELA), has served on the Estate Planning
Council of Northern New Jersey and has acted as a legal advisor to a number of local non-profit
organizations created to support several Morris County populations.
Ms. Wheatley-Liss is a frequent lecturer to professionals and the public, and the author of legal
and consumer-oriented articles. She is the author of Plan Your Own Estate and blogs at New
Jersey Estate Planning & Elder Law Blog, a leading commentary on developments in tax law,
estate planning, estate administration, elder law and business law. She is a two-time recipient
of the Tri-County Scholarship Fund’s Women of Achievement Award as well as several other
honors.
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Ms. Wheatley-Liss received her B.A., with honors, from John Hopkins University, her J. D. from
Boston College School of Law and her LL.M in Taxation from New York University.
Shirley B. Whitenack is a Partner in Schenck, Price, Smith & King, LLP with offices in Florham
Park, Paramus and Sparta, New Jersey. Co-Chair of the firm’s Elder and Special Needs Law,
and Estate and Trust Litigation Practice Groups, she devotes a substantial portion of her practice
to elder and special needs law, estate planning and administration, and trust and estate litigation;
and is on the New Jersey State roster of approved mediators.
Admitted to practice in New Jersey and before the United States District Court for the District of
New Jersey and the Third Circuit Court of Appeals, Ms. Whitenack is a Fellow and Past
President of the National Academy of Elder Law Attorneys (NAELA), a member of its Council of
Advanced Practitioners (CAP) and Past Chair of the New Jersey State Bar Association Elder and
Disability Law Section. A former Trustee of ICLE, Ms. Whitenack is a member of the Special
Needs Alliance and has been a member of the American Bar Association Litigation and Real
Property, Trusts & Estates Sections, and the Morris County Bar Association Estates & Trusts
and Elder Law Committees. She is also Past Chair of the Morris County Bar Association’s Elder
Law Committee and a former Trustee of the New Jersey State Bar Association.
Ms. Whitenack was an adjunct professor at Stetson University College of Law in its J.D. and LL.M.
in Elder Law Programs, and is a frequent author and lecturer for ICLE, NAELA and other
professional and charitable organizations. Quoted in publications including the Wall Street Journal,
Market Watch, Money Magazine and Consumer Reports, she is a contributing author to New
Jersey Elder Law Practice, 3
rd
Ed. (ICLE), Trusts for Senior Citizens (ALI-ABA), Elder Law Trusts
and Estates (Aspatore) and Creating a Trust: What You Need to Know (Aspatore). She is the
recipient of numerous honors, including GANJI’s Recognition Award in 2003, the NJSBA
Legislative Service Award in 2003 and Amicus Curiae Award in 2004, ICLE’s Distinguished Service
Award in 2007, the NJSBA Elder & Disability Law Section’s Distinguished Service Award in 2009
and the Community Health Law Project’s Ann Klein Advocate Award in 2011. In 2012 Ms.
Whitenack was honored by the NJSBA for her long service as a Trustee of ICLE and received the
NJSBA’s Distinguished Legislative Service Award for her contribution to New Jersey’s enactment of
the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act. She was also the
recipient of the Morris County Bar Association’s Civil Practice Award in 2015 and in 2017 received
ICLE’s Alfred C. Clapp Award for Excellence in Continuing Legal Education. She is also the
recipient of the 2018 NAELA John J. Regan Writing Award as a co-author of “The Fiduciary Pitfalls
of Managing Special Needs Trusts That Own Real Estate” (NAELA Journal, Vol. 13, No. 1, Spring
2017) and in 2019 received the prestigious Medal of Honor from the New Jersey State Bar
Foundation.
Ms. Whitenack received her B.A., cum laude, from the State University of New York at Stony Brook
and her law degree, cum laude, from Seton Hall University School of Law, where she was Notes &
Comments Editor of the Seton Hall Law Review.
Kerri A. Wright is a Principal of Porzio, Bromberg & Newman, P.C. in the firm’s Morristown,
New Jersey, office, and a member of the Litigation Practice Group, where she is Co-Chair of the
Education and Employment Team. She focuses her practice in education and employment law,
with an emphasis in the representation of management in employment counseling and litigation.
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Ms. Wright is admitted to practice in New Jersey and New York, and before the United States
District Court for the District of New Jersey and the Southern, Eastern and Northern Districts of
New York; the Second Circuit Court of Appeals; and the United States Supreme Court. Past
President and a former member of the Chester Board of Education, she is a member of the
Morris County Bar Association, the New Jersey Association of School Attorneys and the New
Jersey Women Lawyers Association. She is a Fellow of LeadNJ, has lectured to professional
and community organizations, and is the recipient of the New Jersey School Board Member of
the Year award bestowed by the New Jersey School Boards Association for 2021-2022.
Ms. Wright received her B.A., magna cum laude, from Seton Hall University; her M.P.Adm. from
Seton Hall University and her J.D., cum laude, from Emory University School of Law.
Jacqueline Yarmo is an associate with Fink Rosner Ershow-Levenberg Marinaro LLC in Clark,
New Jersey. She concentrates her practice in elder law, guardianship, Medicaid applications for
nursing care, Medicaid Fair Hearings (appeals), special needs trust planning and estate
administration.
Prior to joining Fink Rosner Ershow-Levenberg Marinaro Ms. Yarmo worked with Mandelbaum
Barrett, P.C., The Law Office of Sharon Rivenson Mark, Esq., Central Jersey Legal Services and
the Jewish Association Serving the Aging Community Guardian Program (New York City). She
has been involved in the Verona Schools Community Association and the Music Parents
Association.
Ms. Yarmo received her B.F.A. from Boston Conservatory and her law degree, cum laude, from
Rutgers Law School. She was a law clerk to the Honorable Randal C. Chiocca, Chancery
Division, Passaic County.
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Trust Taxation for Elder and Special
Needs Practitioners: Selected Topics
Gary Mazart, Esq.
Jordan M. Wassel, Esq.
Sarah G. Townsend, Esq.
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•Outright Transfers
•Typically, simple, quick and inexpensive to implement.
•Transfers in Trust
•More complex and consequently slower and more expensive
to implement.
•Generally, provide additional management, tax and asset
preservation benefits.
•We will explore examples of transfers to trusts in the long-
term care and estate planning space.
Overview
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Transfer Tax Overview
•Federal Gift, Estate & GST Basic Exclusion Amount (2024):
$13,610,000 per person
•Federal Marital Deduction & Portability: Estate & Gift Tax But Not
GST
•Federal Gift Tax Annual Exclusion (2024): $18,000 Per Person
•New Jersey Estate Tax: “Repealed” as of 2018
•No New Jersey Gift Tax
•New Jersey Inheritance Tax: Class “A” and “E” are exempt, Class
“C” 11%-16% tax, Class “D” 15%- 16% tax
Estate/Gift Tax Landscape
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Tax Implications
•Consideration should be given to the applicable income tax rate
and available deductions to a trust v. individual (grantor or
beneficiary)
Grantor v. Non-Grantor Tax
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Income Tax Landscape: 2024 Federal Tax Rates
(Married Filing Jointly v. Estates/Trusts)
Tax RateMFJ- Income Range
10%$0 - $23,200
12%$23,200 - $94,300
22%$94,301 - $201,050
24%$201,051 - $383,900
32%$383,901 - $487,450
35%$487,451 - $731,200
37%$731,201 +
Tax RateTrust/Estate- Income Range
10%$0 - $3,100
24%3,101- $11,150
35%$11,151 - $15,200
37%$15,201 +
Standard Deductions
MFJ: $29,200; Estate: $600; Simple Trust: $300; Complex Trust: $100 (QDT: $5,050)
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Income Tax Landscape: 2024 NJ Tax Rates
(Married Filing Jointly and Estates/Trusts)
Tax RateIncome Range
1.40%$0 - $20,000
1.75%$20,001 - $50,000
2.45%$50,000 - $70,000
3.50%$70,001 - $80,000
5.525%$80,001 - $150,000
6.37%$150,001 - $500,000
8.97%$500,000 - $1,000,000
10.75%$1,000,001 +
Filing Thresholds
MFJ: $20,000
Estates/ Trusts: $10,000
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Tax RateTaxable Income (Married Filing Jointly)
0%$0 - $94,050
15%$94,051 - $583,750
20%$583,751 +
Income Tax Landscape: 2024 Federal Capital
Gains Rates
New Jersey: Standard Income Tax Rates Apply to Net Gain
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TRUSTS FOR LONG-TERM CARE PLANNING
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•Special Needs Trust [§1396p(d)(4)(A)]
•Generally
•Presumptive alternative to outright transfer
•Funded with assets owned by a beneficiary with disabilities
•Beneficiary must be under the age of 65 when trust is
established and funded
•Beneficiary must be disabled as defined under Social
Security Law
•The state must receive all amounts remaining in the trust
upon the death of such individual up to an amount equal
to the total medical assistance paid on their behalf [42
U.S.C. §1396 et seq.]
•NJ SNTs must comply with N.J.A.C. 10:71-4.11
Trusts for LTC Planning: SNT
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•Income Tax
•SNTs are Grantor Trusts: tax attributes are generally considered to by
owned by the Grantor
•IRS characterizes the parent, grandparent, legal guardian, or court
creating a SNT as a “nominal grantor” and treats the beneficiary with
disabilities as the “true grantor,” since the trust is funded with assets of
the beneficiary with disabilities
•Named grantor treated as a Nominal/Accommodation Grantor since the
only party making the gratuitous transfer to the trust would be treated as
the “true grantor” [§1.671-2T, T.D. 8831, 8/5/99]
•Beneficiary is treated as actual Grantor and would report all trust income
on his or her individual income tax returns regardless of whether trust
assets are distributed to or for his or her benefit [Rev. Rul. 83-25]
•SNTs may be structured as Non-Grantor Trusts, where trust is taxed as a
separate entity if the discretionary payment of income is subject to the
approval or consent of an adverse party [IRC 677]
Income Taxation of SNT
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•Supplemental Benefits Trusts (Third Party Special Needs
Trusts)
•Generally
•Alternative to Outright Transfer
•Funded by someone other than the beneficiary with disabilities
•SBTs may be
inter vivos
or testamentary
•If
inter vivos
may be revocable or irrevocable
•Trust beneficiary can be over the age of 65 and is otherwise not
age restricted
•No Medicaid payback requirement
•Trust may benefit another beneficiary without jeopardizing the
disabled beneficiary’s eligibility for benefits
Trusts for LTC Planning: SBT
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Inter Vivos
•Can be drafted as either a Grantor or Non-Grantor/Complex Trust:
Grantor Trust:
-Income from the SBT will be reportable by and taxed to the parent,
spouse or other relative or third-party grantor who created the trust
during his or her lifetime, at least to the extent that the grantor is the
contributor to the trust.
-Grantor will report any trust losses, deductions and credits on his or
her individual income tax returns. Upon the grantor’s death (or during
the grantor’s lifetime, with respect to contributions made to the trust
by third parties), the trust continues as a “complex” trust.
-Contributions by someone other than Grantor will be treated as
complex.
Complex Trust:
-Allowed annual income deduction of $100 (unless trust instrument
require distribution of all income , then an income deduction of $300).
-May elect to treat as Qualified Disability Trust (allowed an annual
income deduction of $5,050 (in 2024).
Inter Vivos v. Testamentary SBT
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•Income Tax
•If irrevocable, may be drafted as either a grantor or complex
trust.
•Complex Trust [I.R.C. §641-685]:
-Income reportable by and taxed to the trust
-Beneficiary will be taxed with his or her proportionate share of the DNI
as distributions are made, whether from income or principal
-Election may be taken to treat a complex SBT as a Qualified Disability
Trust
•The New Jersey trust income tax rates are calculated
consistent with the table on Form NJ-1041. Enhanced filing
threshold of $10,000.
•3.8% Medicare Tax on Net Investment Income: Beginning in
2013, a 3.8% flat tax has been imposed on a taxpayer’s “net
investment” income.
•Consider granting vertical or horizontal general power of
appointment to trust grantor or other trust beneficiary or third
party or providing Trust Protector with discretion to do same.
Income Taxation of SBT
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•Qualified Disability Trust (QDT)
•An election may be taken to treat any complex
trust as a Qualified Disability Trust under
I.R.C.§642(b)(2)(C) if:
•The Trust is established solely for the benefit of a
disabled individual under the age of 65
•All beneficiaries of the Trust are determined to be
disabled by the close of the tax year
•QDTs are allowed a deduction equal to the
personal exemption amount, currently $5,050 (in
2024)
•A QDT may still qualify if the principal reverts to a
person who is not disabled after the trust ceases
to have any beneficiary who is disabled
Qualified Disability Trust
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Trusts for LTC Planning:
Irrevocable Trust
•Irrevocable Trusts for Medicaid Planning Purposes
•Generally
•Used as part of an asset preservation plan for potential Medicaid applicants so the individual’s assets
do not count toward the individual’s available assets for purposes of qualifying for Medicaid (subject to
the 5-year look-back period) or as Accountable Assets for purposes of calculating the asset spend-
down to $24,000 (single) or $110,000 (married) for NJ Veterans’ Memorial Homes (subject to a 3-year
look-back period).
•Funded by the Medicaid applicant (“Grantor’) for the benefit of individuals other than the Grantor.
•Provided the applicant does not retain an interest in the assets, a properly structured irrevocable trust
can avoid New Jersey estate recovery.
•Can be structured as a Grantor Trust for income tax purpose, meaning the applicant reports all trust
income on their individual income tax return.
•If the trust is later determined to be “complex,” the trustees will be responsible for reporting the trust
income on a separate tax return.
•Can include a mandatory tax reimbursement provision that would result in the trust and its assets
included as part of Grantor’s estate for estate tax purposes because its available to discharge an
obligation of support. I.R.C. §2036. This would trigger the tax cost basis of trust assets remaining at
death to be adjusted to their fair market value at Grantor recipients date of death.
•See: CCA Memo No. 202352018 and Rev. Rul. 2004-64, 2004-2.
•The tax reimbursement provision should be analyzed in context of total income the applicant receives,
the impact on their Medicaid eligibility, and the amount of built-in gain on trust assets.
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2.0 Relevant Updates
•Designated Beneficiaries inheriting retirement accounts can withdraw the funds at any time during 10-year payout. However,
such beneficiary must also take annual RMD if the plan owner died after their required beginning date (generally, April 1 of
the year following the calendar year in which owner reached age 72 (73 if owner reach age 72 after Dec. 31, 2022).
•Defines 21 as age of majority for RMD rules, regardless of state law definition.
•Eligible Designated Beneficiary (surviving spouse, minor child, disabled or chronically ill person, person 10 or less years
younger than deceased account owner) can opt out of stretch if the plan or custodian allows for it in the contract.
•The IRS released final regulations updating RMD rules for retirement plans, reflecting certain SECURE Act and SECURE 2.0 Act
changes, and generally follow the 2022 proposed regulations. At the same time, the IRS issues new proposed 2024
regulations dealing with additional RMD issues related to SECURE 2.0. [89 FR 58886, July 18, 2024]
Applicable Multi-Beneficiary Trusts
•At least one beneficiary must be either disabled or chronically ill beneficiary and all trust beneficiaries must be designated
beneficiaries.
•A qualified charity will now be treated as a designated beneficiary, which will permit the stretch distribution when retirement
plans left to trust for a disabled or chronically ill individual and trust names said charity as a remainder beneficiary.
•Classification of Applicable Multiple Beneficiary Trusts into Type I and Type II
•Type I: Trust that is divided into separate shares for each beneficiary upon death of plan holder. Allows for separate accounts rule to
apply.
•Type II: If trust provides that only a disabled/chronically ill beneficiary has an interest in plan benefits during his/her
lifetime.
•If plan owner died before their required beginning date, the disabled/chronically ill beneficiary’s age will be used. If multiple disabled/chronically
ill beneficiaries of a single trust, the oldest life expectancy is used for determining stretch.
•If the plan owner died after their required beginning date, then the longer for the plan owner’s life expectancy or the oldest disabled/chronically
ill beneficiary’s life expectancy will be used.
SECURE Act
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•Third-Party Donee Trusts
•Generally
•Created by one or more donees, typically the children of
the donor parent
•May be established as “separate share” or “pot” trust
•Assets held in trust for a term of years or until such
earlier time as determined by the trustees
•Trustees have broad discretion to distribution
income/principal to the donees and/or any of their
descendants
•Upon termination, balance of assets distributed to
donees
Trusts for LTC Planning: Third-
Party Donee Trusts
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•Income Tax
•Typically structured as Grantor Trust
•Flexibility can be built in to utilize step-up in basis at
decedent donor’s death:
1. Appoint Trust Advisor with power to grant general power of
appointment
-If granted, at grantee’s death, trust assets includable in his or her
estate, but because of such inclusion, receive step-up in basis
2. Have document provide individual with time certain option (no less
than 60-days) to exercise GPOA
-At individual’s death, trust assets includable in his or her taxable
estate so long as individual dies within three years of lapse of
GPOA, and because of such inclusion, receive step-up in basis
-Arguable that 5-year look back period will not begin until after the
option period has passed
Income Taxation of Third-Party
Donee Trusts
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•Qualified Income Trust (QIT)
•Generally
•Created by individuals with income in excess of the
Medicaid income cap
•Must be funded with an entire income source(s)
•Must hold only the applicant’s oncome and cannot
contain any of the applicant’s resources
•QIT must be irrevocable and managed by a trustee
(other than the applicant)
•Must provide Medicaid with a right of reimbursement at
applicant’s death, up to the extent of Medicaid benefits
paid on the applicant’s behalf
Trusts for LTC Planning: Qualified
Income Trust
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•Income Tax
•Structured as Grantor Trust
•Even though an income source is being used
to fund the QIT, the assets populating the
QIT are treated as principal not income
•Because the QIT typically pays the
applicant's cost share each month, income
isn’t generally earned and accumulated
inside of a QIT and thus it is unlikely that a
QIT will meet the filing threshold to even
need to file an income tax return
Income Taxation of QITs
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•Income Only Trusts
•Generally
•An irrevocable trust created by a Medicaid applicant or the applicant’s spouse
•During the Grantor’s life, income payable to the Grantor/spouse, or in trustee’s
discretion to other beneficiaries; principal is retained or payable in trustee’s
discretion to other beneficiaries
•At Grantor’s death, income may continue to be paid to spouse and principal
retained or paid to beneficiaries, other than spouse; or the trust terminates and
pays out to the remainder beneficiaries
•Principal not deemed available in the above scenario
•Funding of an IOT is deemed an uncompensated transfer and creates a penalty
period
•Payouts from the trust to beneficiaries other than the grantor or the grantor’s
spouse will not be deemed uncompensated transfers [See letter from Sally K.
Richardson, Director, Medicaid Bureau, Department of Health and Human
Services, Health Care Financing Administration (December 23, 1993)]
Trusts for LTC Planning: Income
Only Trusts
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•Income Tax
•Typically, structured as Grantor Trust, but can
be structured as complex trust.
Income Taxation of Income Only
Trusts
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FEDERAL V. NEW JERSEY FORM 1041
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Federal
•Fiduciary must file Federal Form 1041 if
the trust has:
a) any taxable income
b) gross income of $600 or more
c) non-resident alien beneficiary
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New Jersey
•Fiduciary must file NJ Form 1041 if the
trust has gross income, before
exemptions or deductions, of more than
$10,000
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Charitable Deduction
Federal: Any part of the gross income of a
trust that, under the terms of the trust, is
paid for a charitable purpose specified in
section 170(c) is allowed as a deduction.
New Jersey: There is no charitable
deduction allowed
Deductions
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•Federally, capital gains are tax at a
separate tax rate
•NJ does not have a separate tax rate and
taxes capital gains as ordinary income
Capital Gains
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Grantor Trusts
•1 grantor: can, but not required to obtain EIN
•Multiple grantors: required to obtain EIN
•Trustee can report income in two ways:
1. file Form 1099 with IRS stating Grantor’s reportable
income and provide Grantor with copy of 1099 to include
information on personal income tax return
2. file separate income tax return (Form 1041) for the
trust, which includes attachment with each Grantor’s share
of income and his/her tax rate
Income Tax Filing
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Thank you
Gary Mazart, Esq.
973-539-1000
gm@spsk.com
Jordan M. Wassel, Esq.
973-539-1000
jmw@spsk.com
Sarah G. Townsend, Esq.
973-539-1000
stownsend@spsk.com
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An Overview of Eligibility
Rules for Adults in the
Community
M E D I C A I D
M Y S T E R I E S :
Lauren Marinar o, Esq.
Jacquelin e Y arm o, E sq.
Fink Rosne r Ershow - Lev enb e rg Marina ro, LLC
Septem be r 10, 20 24
1
Pathways to Medicaid Eligibility
SSI
MEDICAID ONLY
WORKABILITY
ABD: MANAGED LONG TERM SERVICES & SUPPORTS
DDD WAIVER PROGRAMS:
•SUPPORTS PROGRAM
•COMMUNITY CARE PROGRAM
DAC: SECTION 1634 DISABLED ADULT CHILD
ABD: NJ CARE- AGED, BLIND, DISABLED
ACA EXPANSION (OR MAGI Medicaid)
MEDICARE SAVINGS PROGRAM
2
Medicaid-adjacent Programs
JACC: JERSEY ASSISTANCE FOR COMMUNITY CAREGIVING
ALZHEIMER’S ADULT DAY SERVICES PROGRAM
PAAD: PHARMACEUTICAL ASSISTANCE TO THE AGED AND DISABLED
PROGRAM
HAAAD: HEARING AID ASSISTANCE TO THE AGED AND DISABLED
PROGRAM
LIFELINE UTILITY ASSISTANCE
3
Pathways to Medicaid Eligibility
DDD
Could there be more
acronyms?
4
SSI: SUPPLEMENTAL SECURITY INCOME
SSI IS A FEDERAL PROGRAM THAT PROVIDES MONTHLY
PAYMENTS TO PEOPLE WITH LIMITED INCOME AND
RESOURCES TO MEET BASIC NEEDS FOR FOOD, CLOTHING
AND SHELTER.
WHO IS ELIGIBLE?
•PEOPLE WHO ARE 65 OR OLDER
•PEOPLE OF ANY AGE, INCLUDING CHILDREN, WHO ARE
BLIND OR HAVE DISABILITIES
Pathway to Medicaid
5
SSI ELIGIBILITY
https://www.nj.gov/humanservices/ddd/documents/supplemental_security_income(ssi)_factsheet.pdf
ELIGIBILITY REQUIRES:
•LITTLE OR NO INCOME AND FEW RESOURCES TOTAL RESOURCES OF $2000
OR LESS FOR SINGLE PERSON
•TOTAL RESOURCES OF $3000 OR LESS FOR MARRIED COUPLE; &
•US CITIZEN OR NATIONAL, OR CERTAIN CATEGORY OF ALIEN; &
•RESIDENT OF ONE OF 50 STATES, D.C. OR NORTHERN MARIANA ISLANDS; &
•NOT ABSENT FROM THE COUNTRY FOR 30 CONSECUTIVE DAYS OR MORE
EVERY NEW JERSEY RESIDENT WHO RECEIVES SSI WILL
AUTOMATICALLY RECEIVE NEW JERSEY MEDICAID.
HAVING SSI PROTECTS MEDICAID ELIGIBILITY FOR THE FUTURE.
Pathway to Medicaid
6
"MEDICAID ONLY”
NEW JERSEY CARE... SPECIAL MEDICAID PROGRAM
SPECIAL PROGRAM THAT PROVIDES MEDICAID FOR INDIVIDUALS
WHO ARE 65 YEARS OLD OR OLDER, BLIND OR DISABLED &
UNABLE TO AFFORD THE HEALTHCARE THEY NEED.
N.J.A.C. 10:71 et seq
Pathway to Medicaid
7
"MEDICAID ONLY”
NEW JERSEY CARE... SPECIAL MEDICAID PROGRAM
Pathway to Medicaid
ELIGIBILITY REQUIRES:
•65 YEARS OLD AND/OR DETERMINED TO BE BLIND OR DISABLED BY
EITHER THE SSA OR DMAHS
•RESIDENT OF NEW JERSEY AND
•US CITIZEN OR QUALIFIED ALIEN
•
Most immigrants who arrive after 8/22/96 are barred from Medicaid for 5
years
•FINANCIAL ELIGIBILITY (≤100% OF FPL)
•CURRENT MONTHLY INCOME LIMIT ≤$1,255 SINGLE, $1,704 COUPLE
•CURRENT MONTHLY RESOURCE LIMIT ≤$4,000 SINGLE, $6,000 COUPLE
https://www.nj.gov/humanservices/dmahs/clients/medicaid/abd/abd_fact_sheet.pdf
8
Pathway to Medicaid
OFFERS FULL NJ MEDICAID HEALTH COVERAGE TO INDIVIDUALS
WITH DISABILITIES WHO ARE WORKING & WHOSE EARNINGS
WOULD OTHERWISE MAKE THEM INELIGIBLE FOR MEDICAID.
ELIGIBLE INDIVIDUALS PAY A SMALL PREMIUM AND RECEIVE FULL
NJ MEDICAID COVERAGE
ELIGIBILITY REQUIRES:
•BE AT LEAST 16 YEARS OLD
•BE A NEW JERSEY RESIDENT
•BE EMPLOYED, EITHER FULL OR PART TIME; AND BE ABLE TO SHOW PROOF OF EMPLOYMENT
•BE DETERMIEND AS DISABLED BY THE SOCIAL SECURITY ADMINISTRATION OR THE MEDICAL
REVIEW TEAM AT THE DMAHS, PRIOR TO AGE 65
https://www.nj.gov/humanservices/dds/programs/njworkability/
WORKABILITY: NEW AND IMPROVED!
9
Pathway to Medicaid
WORKABILITY
INCOME &
ASSET
REQUIREMENTS
10
Pathway to Medicaid
WORKABILITY con’t.
Medicaid’s definition of EMPLOYED: Individuals working in a paid occupation, whether in
cash or in kind, including, but not limited to:
•full time employment;
•part time employment;
•the practice of a profession; self-employment;
•farm work;
•homebased employment or other gainful work.
An individual who identifies as self-employed must have net earnings of at least $400.00
annually in accordance with requirements of the Internal Revenue Services under Title 26 of
the United States Code (U.S.C. 26) and file taxes accordingly.
•The new NJ statute also gives a one-year grace period for continued benefits after job loss
N.J.S.A. 30:4D(i)(18)(b)
•No lookback
•Estate recovery for enrollees over 55 as to all benefits
11
DAC: §1634 DISABLED ADULT CHILD
WHO IS ELIGIBLE? AN INDIVIDUAL WHO HAD BEEN RECEIVING SSI
BENEFITS AND:
•IS AT LEAST 18 YEARS OLD
•HAS BLINDNESS OR DISABILITY WHICH BEGAN BEFORE AGE 22
•HAS LOST SSI BENEFITS DUE TO THE RECEIPT OF SOCIAL
SECURITY BENEFITS ON A PARENT’S RECORD DUE RETIREMENT,
DEATH, OR DISABILITY OF PARENT
•RESOURCES ≤$2000 (NOT INCLUDING A SPECIAL NEEDS TRUST
Pathway to Medicaid
https://nj.gov/humanservices/ddd/assets/documents/individuals/dac-flyer.pdf
A PERSON WHO MEETS THE ABOVE CRITERIA MAY QUALIFY AS A
DISABLED ADULT CHILD PER §1634 OF THE SOCIAL SECURITY ACT.
12
DAC: §1634 DISABLED ADULT CHILD
FOR INDIVIDUALS ENROLLED IN THE DDD SUPPORTS PROGRAM OR
COMMUNITY CARE PROGRAM:
•DDD WILL SEND THE NJ FAMILY CARE ABD REQUEST FOR
INFORMATION (RFI) IN A BLUE ENVELOPE
Pathway to Medicaid
https://nj.gov/humanservices/ddd/assets/documents/individuals/dac-flyer.pdf
FOR INDIVIDUALS NOT ENROLLED IN THE DDD SUPPORTS PROGRAM
OR COMMUNITY CARE PROGRAM:
•YOUR LOCAL BOARD OF SOCIAL SERVICES WILL SEND THE NJ
FAMILY CARE ABD REQUEST FOR INFORMATION (RFI) IN A BLUE
ENVELOPE
13
Pathway to Medicaid
ABD: AGED, BLIND,
DISABLED PROGRAMS
https://www.nj.gov/humanservices/dmahs/clients/medicaid/abd/ABD_Overview.pdf
ELIGIBILITY REQUIREMENTS:
•65 YEARS OLD OR OLDER, OR
•DETERMINED TO BE BLIND OR DISABLED BY EITHER THE SSA OR NJ DMAHS
•RESIDENT OF NEW JERSEY AND
•US CITIZEN OR QUALIFIED ALIEN
•
Most immigrants who arrive after 8/22/96 are barred from Medicaid for 5
years
•FINANCIAL ELIGIBILITY (≤100% OF FPL)
•CURRENT MONTHLY INCOME LIMIT ≤$1,255 SINGLE, $1,704 COUPLE
•CURRENT MONTHLY RESOURCE LIMIT ≤$4,000 SINGLE, $6,000 COUPLE
14
•FINANCIAL ELIGIBILITY (≤100% OF FEDERAL POVERTY LIMIT)
•CURRENT MONTHLY INCOME LIMIT ≤$1,255 SINGLE, $1,704
COUPLE
•CURRENT MONTHLY RESOURCE LIMIT ≤$4,000 SINGLE,
$6,000 COUPLE
ABD: FINANCIAL ELIGIBILITY
FIVE YEAR LOOKBACK ON RESOURCES FOR THOSE RECEIVING LTSS:
•LOOKBACK PERIOD CHECKS FOR ANY RESOURCES THAT MAY HAVE
BEEN TRANSFERRED FOR LESS THAN FAIR MARKET VALUE
ESTATE RECOVERY FOR THOSE RECEIVING LTSS:
•UPON DEATH, THE BENEFICIARY’S ESTATE WILL BE RESPONSIBLE
TO PAY THE STATE OF NJ FOR ALL COSTS ASSOCIATED WITH
THEIR MEDICAL ASSISTANCE.
15
ACA EXPANSION or MAGI MEDICAID
Pathway to Medicaid
MAGI (MODIFIED ADJUSTED GROSS INCOME) MEDICAID IS A PROGRAM THAT IS
•FOR INDIVIDUALS 21 – 64 YEARS OLD
•NO DISABILITY DETERMINATION IS REQUIRED (BUT IS ALLOWED)
•INDIVIDUAL CANNOT RECEIVE MEDICARE
•INDIVIDUAL CANNOT BE LISTED AS A DEPENDENT ON THEIR PARENT’S TAX
RETURN
INCOME LIMIT: AT OR BELOW 138% OF THE FPL
•SINGLE: $1,732 MONTHLY / $20,783 YEARLY
•COUPLE: $2,351 MONTHLY / $28,208
DOES NOT REQUIRE PREMIUMS OR COST-SHARING
https://www.lsnjlaw.org/legal-topics/health-care/medicaid/medicaid-program-nj/pages/income-eligibility-levels-aspx
16
ACA EXPANSION or MAGI MEDICAID, con’t.
Pathway to Medicaid
https://www.lsnjlaw.org/legal-topics/health-care/medicaid/medicaid-program-nj/pages/income-eligibility-levels-aspx
•Based on tax year modified adjusted gross income, so taking
distributions from IRAs and liquidating assets with capital gains will
affect eligibility
•Requires a tax return, even if you are under the threshold
•Has no five year lookback
•Would be subject to Estate Recovery if the recipient is over age-55,
this is for all benefits received, not just LTSS
•Pays for LTSS under a waiver that New Jersey got
•If you receive any other creditable health insurance coverage, you are
not eligible
17
MEDICARE SAVINGS PROGRAMS
NOT a Pathway to Medicaid but…
FEDERALLY FUNDED PROGRAMS MANAGED BY EACH STATE
THAT HELP PEOPLE WITH LIMITED INCOME AND ASSETS (WHO
MAY NOT BE ELIGIBLE FOR FULL MEDICAID) PAY FOR SOME
(OR ALL) OF THEIR MEDICARE PART A & PART B PREMIUMS,
DEDUCTIBLES, COPAYMENTS, & COINSURANCE
https://www.nj.gov/humanservices/doas/services/l-p/msp/
18
MEDICARE SAVINGS PROGRAMS
QMB: QUALIFIED MEDICARE
BENEFICIARY PROGRAM:
•HELPS PAY FOR PREMIUMS,
DEDUCTIBLES, COPAYMENTS, &
COINSURANCE FOR SERVICES &
ITEMS MEDICARE COVERS.
•YEARLY INCOME LIMIT: $15,060
FOR SINGLES, $20,448 FOR
MARRIED COUPLES
•ASSET LIMIT: $9,430 FOR
SINGLES, $14,130 FOR MARRIED
COUPLES
QI: QUALIFYING INDIVIDUAL:
•PROGRAM PAYS MEDICARE
PART B PREMIUMS;
RECIPIENT MUST MEET
INCOME & ASSET LIMITS
(2024):
•INCOME: $20,340 FOR
SINGLES, $27,600 FOR
MARRIED COUPLES
•ASSETS: $9,430 FOR
SINGLES, $14,130 FOR
MARRIED COUPLES
SLMB: SPECIFIED LOW-INCOME
MEDICARE BENEFICARY (SLMB)
•PROGRAM PAYS MEDICARE
PART B PREMIUMS;
•YEARLY INCOME LIMIT:
$18,072 FOR SINGLES,
$24,528 FOR MARRIED
COUPLES
•ASSET LIMIT: $9,430 FOR
SINGLES, $14,130 FOR
MARRIED COUPLES
19
Medicaid-adjacent Programs
JACC: JERSEY ASSISTANCE FOR COMMUNITY CAREGIVING
ALZHEIMER’S ADULT DAY SERVICES PROGRAM
PAAD: PHARMACEUTICAL ASSISTANCE TO THE AGED AND DISABLED
PROGRAM
HAAAD: HEARING AID ASSISTANCE TO THE AGED AND DISABLED
PROGRAM
LIFELINE UTILITY ASSISTANCE
20
JACC: JERSEY ASSISTANCE FOR
COMMUNITY CAREGIVING
Medicaid-adjacent Program
PROGRAM THAT PROVIDES IN-HOME SERVICES TO SENIORS
AT RISK OF PLACMENT IN A NURSING HOME. JACC
INCLUDES ARRAY OF SERVICES DESIGNED TO SUPPLEMENT
THE PERSON’S CAREGIVER NETWORK. SERVICES CAN
INCLUDE:
•CARE MANAGEMENT – HHA – RESPITE CARE – HOME
MODIFICATION – TRANSPORT
•SPECIAL MEDICAL EQUIPMENT – CHORE SERVCE – MEAL
SERVICE – DAY CARE
https://www.nj.gov/humanservices/doas/documents/JACC%20brochure%20-%20Eng.pdf
21
JACC: JERSEY ASSISTANCE FOR
COMMUNITY CAREGIVING
WHO QUALIFIES? NJ RESIDENT 60 YEARS OLD OR OLDER WHO:
•REQUIRES SNF LEVEL OF CARE BUT WISHES TO REMAIN HOME
•NOT FINANCIALLY ELIGIBLE FOR MLTSS OR OTHER NJ FAMILYCARE
PROGRAMS
•IS NOT OR WILL NOT STOP PARTICIPATING IN THE NJ ALZHEIMER’S ADULT
DAY SERVICE PROGRAM OR STATEWIDE RESPITE CARE PROGRAM
•HAS RESOURCES BELOW
•$40,000 INDIVIDUAL; $60,000 COUPLE
•US CITIZEN OR QUALIFIED PERMANENT RESIDENT
•HAS NO ALTERNATE MEANS TO OBTAIN THE NEEDED SUPPORT, AND
•LIVES IN THE COMMUNITY, NOT IN ALF, SNF OR RESIDENTIAL CARE FACILITY
Medicaid-adjacent Program
22
ALZHEIMER’S ADULT DAY
SERVICES PROGRAM
PROGRAM THAT PROVIDES ATTENDANCE AT ADULT DAY CENTERS FOR
PEOPLE WITH DEMENTIA.
WHO QUALIFIES? NJ RESIDENT WITH A PERMANENT, PROGRESSIVE TYPE OF DEMENTIA &
•HAS AN UNPAID/UNCOMPENSATED CAREGIVER: SUCH AS SPOUSE, PARTNER, CHILD,
OTHER FAMILY MEMBER, FRIEND, OR NEIGHBOR WHO PROVIDES DAILY CARE (FROM
“CHECKS” TO TOTAL CARE).
•LIVES IN THE COMMUNITY: NOT IN ALF, SNF OR RESIDENTIAL CARE FACILITY.
•DOES NOT PARTICIPATE IN MLTSS OR OTHER NJ FAMILYCARE PROGRAM, JACC,
STATEWIDE RESPITE OR CONGREGATE HOUSING SERVICE PROGRAM.
Medicaid-adjacent Program
https://www.nj.gov/humanservices/doas/services/a-k/aads/
23
ALZHEIMER’S ADULT DAY SERVICES
PROGRAM: FINANCIAL ELIGIBILITY
SINGLE PERSON (UNMARRIED OR WIDOWED):
•MAXIMUM $50,256 ANNUAL INCOME
•MAXIMUM $40,000 LIQUID ASSETS
MARRIED PERSON (UNMARRIED OR WIDOWED):
•MAXIMUM $58,632 COMBINED ANNUAL INCOME
•MAXIMUM $60,000 LIQUID ASSETS
•THIS PROGRAM PROVIDES SUBSIDIES SO THERE MAY BE A CO-PAY BASED ON INCOME
Medicaid-adjacent Program
24
PAAD: PHARMACEUTICAL ASSISTANCE
TO THE AGED & DISABLED
Medicaid-adjacent Program
STATE FUNDED PROGRAM THAT HELPS OLDER ADULTS AND INDIVIDUALS
WITH DISABILITIES SAVE MONEY ON THEIR PRESCRIPTION DRUG COSTS.
•PAAD PROVIDES COVERAGE FOR
•PRESCRIBED LEGEND DRUGS,
•INSULIN & INSULIN SUPPLIES, &
•SYRINGES FOR INJECTABLE MEDICINES FOR THE TREATMENT OF MS
•PAAD COPAYMENT:
•$5 FOR EACH PAAD-COVERED GENERIC DRUG RX
•$7 FOR EACH PAAD-COVERED BRAND NAME DRUG RX
•PAAD DOES NOT PAY FOR DIABETIC TESTING SUPPLIES.
https://www.nj.gov/humanservices/doas/services/l-p/paad/
25
Medicaid-adjacent Program
HAAAD: HEARING AID ASSISTANCE TO
THE AGED & DISABLED
•IF ONE HEARING AID IS PURCHASED ONE YEAR, AND ANOTHER HEARING AID IS
PURCHASED THE FOLLOWING YEAR FOR A DIFFERENT EAR, INDIVIDUALS CAN
REAPPLY FOR REIMBURSEMENT OF THE SECOND HEARING AID (ONCE EVERY THREE
YEARS OF EACH HEARING AID).
•MUST BE CURRENTLY ENROLLED IN PAAD OR LIFELINE; OR COMPLETE THE NJSAVE
APPLICATION TO VERIFY AGE/DISABLITIY STATUS, RESIDENCY & INCOME.
https://www.nj.gov/humanservices/doas/services/a-k/aads/
HAAAD PROVIDES UP TO $500 REIMBURSEMENT TO OFFSET THE PURCHASE
OF A HEARING AID, OR UP TO A $1000 REIMBURSEMENT TO OFFSET THE
PURCHASE OF TWO HEARING AIDS.
26
Medicaid-adjacent Program
LIFELINE UTILITY ASSISTANCE
LIFELINE CONSISTS OF 3 PROGRAMS:
•LIFELINE CREDIT PROGRAM: PROVIDES $225 ANNUAL BENEFIT IN THE FORM OF A
CREDIT ON ELECTRIC AND GAS UTILITY BILLS
•TENANTS LIFELINE ASSISTANCE PROGRAM: PROVIDES A $225 ANNUAL BENEFIT IN
THE FORM OF A CHECK TO ELIGIBLE TENANTS WHO HAVE THE COST OF
GAS/ELECTRICITY INCLUDED IN THEIR RENT.
•SPECIAL UTILITY SUPPLEMENT: PROVIDES A SUPPLEMENT OF UP TO $18.75 A MONTH
TO RECIPIENTS OF SSI IN PLACE OF A LIFELINE UTILITY CREDIT OR TENANTS
LIFELINE ASSISTANCE PAYMENT.
https://www.nj.gov/humanservices/doas/services/l-p/lifeline-utility/
LIFELINE IS A UTILITY ASSISTANCE PROGRAM FOR OLDER ADULTS & PEOPLE
WITH DISABILITIES THAT OFFERS $225 ANNUAL BENEFIT TO PERSONS WHO
MEET PAAD ELIGIBILITY REQUIREMENTS OR WHO RECEIVE SSI.
27
Medicaid-adjacent Programs
PAAD, HAAAD & LIFELINE ELIGIBILITY:
PAAD, HAAAD & LIFELINE HAVE SIMILAR ELIGIBILITY REQUIREMENTS:
•NJ RESIDENT;
•65 YEARS OLD OR OLDER OR BETWEE 18-64 YEARS OLD AND RECEIVING SSD; &
•INCOME FOR 2024 IS NO GREATER THAN $52,142 IF SINGLE; $59,209 IF MARRIED.
PAAD RECIPIENTS: MUST ENROLL IN A MEDICARE PART D
PRESCRIPTION DRUG PLAN. PAAD WILL PAY THE MONTHLY
PREMIUM FOR CERTAIN STANDARD BASIC PART D PLANS.
LIFELINE RECIPIENTS: ONLY ONE TENANT IN A HOUSEHOLD IS
ENTITLED TO ASSISTANCE;
RECIPIENTS OF SSI SHOULD NOT FILE AN APPLICATION FOR LIFELINE.
IT IS AUTOMATICALLY INCLUDED IN THEIR SSI PAYMENTS.
https://www.nj.gov/humanservices/doas/services/l-p/paad/
28
M E D I C A I D M Y S T E R I E S :
A n O v e r v i e w o f E l i g i b i l i t y R u l e s f o r A d u l t s i n t h e C o m m u n i t y
Lauren Marinar o, Esq.
Jacquelin e Y arm o, E sq.
Fink Rosne r Ershow- Lev enb e rg Marina ro, LLC
Septem be r 10, 20 24
Thank
you
29
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ESTATES
Estate of Marie Semple
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-3415-21)
Submitted October 18, 2023 | Decision Date: July 31, 2024
• The court affirmed the trial court's decision to deny Oliver V. Short's motion to enforce
provisions of a 2015 consent order related to the sale of property from Marie Semple's
Qualified Personal Residence Trust, which was created in 2000 and came into effect after
her death in 2012. Short, filing pro se, claimed that required documents were not timely
provided as stipulated in the consent order.
• The court found no abuse of discretion in applying the doctrine of laches, which bars claims
brought after unreasonable delays causing prejudice to the other party. Short had multiple
opportunities to seek court relief shortly after the alleged violations in 2015 but did not do
so until 2022, long after the case had been dismissed in 2016. By this time, the closing
attorney had died, the firm Budd Larner had dissolved, and the required documents were
no longer accessible.
• The court emphasized that equity aids the vigilant, and since no rational explanation was
provided for the lengthy delay and significant prejudice was evident, the application of
laches was appropriate. Consequently, Short's motions in April and June 2022 seeking
document enforcement and reconsideration were denied.
Estate of Alice Trainor v. Active Day of Brick
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-1930-22)
Submitted March 12, 2024 | Decision Date: April 3, 2024
• The appellate court affirmed the trial court's decision granting summary judgment in favor
of the defendant in a negligence case involving the death of Alice Trainor, an 89-year-old
with vascular dementia. Trainor suffered a fall while attending Adult Day Health Care
services at the defendant's facility, resulting in her death due to respiratory failure from
congestive heart failure.
• The plaintiffs, represented by Linda Lacerda, alleged that the facility's negligence,
specifically a grossly inadequate staff-to-patient ratio, directly caused Alice's injuries and
eventual death. Claims included simple negligence, negligent hiring and staffing, and
negligent infliction of emotional distress.
• The court emphasized that without medical expert testimony, a lay jury cannot determine
causation in such cases. The use of res ipsa loquitur was rejected, as an elderly person
falling does not inherently indicate negligence. The court also affirmed that without
evidence contradicting the care provided by the facility's staff, the plaintiffs' claims could
not proceed. The appellate court concluded that the plaintiffs' arguments about staffing
ratios and the need for an affidavit were not sufficient to overturn the summary judgment.
Estate of Leonardo Romero v. Care One at Teaneck, LLC
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-3959-22)
Argument Date: June 4, 2024 | Decision Date: June 17, 2024
• The appellate court vacated the trial court's order dismissing the complaint with prejudice
and remanded the case, directing that the Estate be given an opportunity to amend its
complaint. The case involved allegations that Leonardo Romero, who contracted COVID-
19 and died while at Care One at Teaneck, suffered due to negligence, gross negligence,
and malpractice by the defendants, including Daniel Straus as an administrator.
• The motion to dismiss was initially granted on the grounds that the Estate failed to present
sufficient factual allegations to overcome the immunity provided under New Jersey's
COVID-19 Immunity Statute, which protects healthcare professionals and facilities from
liability related to COVID-19 treatment unless there is gross negligence or willful
misconduct.
• The appellate court noted that motions to dismiss for failure to state a claim are generally
without prejudice, allowing plaintiffs the chance to amend their complaints to address
deficiencies. They found the trial judge did not provide a sufficient explanation for the
with-prejudice dismissal, particularly since the allegations could potentially be revised to
meet legal standards.
UNDUE INFLUENCE
Estate of Maria Iannacco
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-1674-22)
Submitted: January 18, 2024 | Decision Date: June 25, 2024
• The court dismissed Francesco Iannacco's complaint alleging undue influence by his
brother, Aldo Iannacco Jr., and Bianca Martinelli, Aldo Jr.'s daughter, in the creation of
their mother Maria Iannacco's 2020 will. Maria had designated Aldo Jr. as the executor of
her estate, leaving him the remainder of the estate while granting each of her grandchildren
$25,000 and Francesco $1.
• Key points included evidence that Maria had estranged herself from Francesco for around
three years before her death due to disputes, including his requests for a power of attorney,
and because he allegedly stopped contacting and caring for her. The evidence presented
showed that Maria, who lived with Aldo Jr. and Bianca, intended to exclude Francesco
from her will due to this estrangement.
• Maria's attorney, Harold Cook, validated her decision-making process, describing Maria as
lucid and intentional in her decisions during the preparation of the will. The court found no
suspicious circumstances or confidential relationship indicative of undue influence.
Contrary to Francesco's claims, evidence showed that Maria voluntarily decided to alter
her testamentary intent due to her estranged relationship with him and her desire to reward
those actively supporting her.
TRUSTS
Estate of Doris Spitz-Oosse
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-0451-22)
Argued: February 6, 2024 | Decision Date: April 10, 2024
• The court upheld a trial court's decision dismissing Brian Spitz's counterclaims for breach
of oral contract and unjust enrichment against his late mother's estate. Brian had asserted
that his late mother, Doris, had verbally promised him a 10% interest in Karroni
Corporation in exchange for his work and later promised him ownership of the Paterson
Property either through her will or sale proceeds. These claims were contested by Sheryl
Held, the estate's executrix and Brian's sister.
• Brian's claims were based on alleged verbal agreements made between him and Doris,
supported by testimonies from Brian, his wife Kimberly, and his uncle, Murray, with Sheryl
testifying on behalf of the estate. The trial judge found Brian's evidence insufficient, noting
the lack of written documentation and the biased nature of testimonies. The judge also
noted a specific writing from Brian to Doris in August 2019 lacked any reference to an oral
contract, and the 2018 Will did not substantiate Brian's claims.
• The judge applied a “clear and convincing” evidence standard in his assessment, which
Brian contested on appeal as overly burdensome. Nonetheless, the appellate court affirmed
the trial judge’s decision, reiterating that the clear and convincing standard was appropriate
under both the Dead Man’s Act and the statute of frauds given the nature of a claim
involving an alleged oral agreement relating to real estate.
Estate of Wu Huai Wen
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-3675-22)
Argued: May 14, 2024 | Decision Date: July 8, 2024
• The court affirmed the Chancery Division's approval of the first interim accounting of a
trust established under Wu Huai Wen's Last Will and Testament, for the period from August
1, 2014, to December 31, 2022. Peter Wen contested the interim accounting, arguing that
the trustee did not adequately scrutinize various expenses and discretionary payments made
to Ping Wen, Wu Huai Wen's spouse.
• The trust established under Article Third of Wu Huai Wen's LWT dictated that the income
of the Family Trust be paid to his spouse, Ping Wen, with discretionary principal payments
also possible for her health, support, and maintenance. Upon Ping's death, the remaining
balance would be distributed among Wu Huai Wen's living descendants. Initially, Ping and
the children were named trustees, but following litigation, Shirley Whitenack was
appointed temporary substitute trustee by court order.
• Peter raised concerns about his sister Catherine's involvement in manipulating their mother
and mismanaging trust assets, including alleged deceptive acquisition of property
ownership and improper rent charges to Ping. Whitenack defended her decisions stating
they were in line with the trust's provisions and noted that $11,000 monthly distributions
mainly covered rent, home health aide costs, and living expenses, without including any
gifting.
• The court agreed with the Chancery Division's assessment that Peter's exceptions were
legally insufficient and that Whitenack had acted within her authorized discretion. The case
highlights the importance of adhering to the explicit terms of a trust and the limited nature
of exceptions to trust accountings, focusing strictly on the trustee's actions and not on
allegations unrelated to the formal accounting process.
GUARDIANSHIP AND DIVORCE
Marshall Williams v. Estate of Evelyn L. Williams
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-2061-21)
Submitted: June 4, 2024 | Decision Date: July 31, 2024
• The court upheld both the Final Judgment of Divorce (FJOD) dated December 10, 2021,
and the February 4, 2022, order denying Marshall Williams' application to rescind the
FJOD. The case involved plaintiff Marshall Williams and the Estate of Evelyn L. Williams,
with Evelyn Williams having been diagnosed with cancer and being in hospice care during
the proceedings.
• Despite settlement negotiations throughout the proceedings, the parties could not fully
resolve their issues. The court noted that Evelyn's health was rapidly declining, prompting
an expedited divorce proceeding on December 10, 2021. Plaintiff argued that there was
confusion over who had power-of-attorney for defendant, as Evelyn had purportedly
revoked her sister Anita Spady's authority in favor of their son. However, during the
conference, Spady testified under oath that she had a written power-of-attorney, which the
judge accepted.
• During the December 10, 2021, virtual conference, the judge proceeded with the
uncontested divorce after verifying all details, including confirming plaintiff's
understanding and voluntary acceptance of the settlement terms. The divorce was finalized,
incorporating a settlement involving the sale of the marital home, distribution of retirement
accounts and personal property, and attorneys' fees.
• Following Evelyn's death on December 22, 2021, plaintiff sought to rescind the FJOD,
alleging that Spady was not legitimately authorized to act on Evelyn's behalf. This request
was denied on February 4, 2022, as the judge emphasized that the settlement and divorce
proceeded as uncontested based on plaintiff's voluntary and knowing agreement.
• The appellate court found no abuse of discretion in the handling of the expedited hearing
on December 10, 2021, given the circumstances of Evelyn's declining health and the
prolonged settlement efforts. The decision to deny the order to show cause was also upheld,
as plaintiff failed to present material facts necessitating a further hearing.
TORT CLAIM ACT POA
William Massi v. Barr, Barr, PSEG, et. al
Superior Court of New Jersey, Appellate Division
(Docket No. A-2005-21)
Argued: January 29, 2024 | Decision Date: June 28, 2024
• The court vacated the summary judgment previously granted to the townships in a personal
injury case involving a bicycle accident caused by poor road conditions. William Massi
suffered serious injuries when he hit several potholes while swerving to avoid a passing
truck on Wyckoff Mills Road, a two-lane public road managed by Monroe Township and
Cranbury Township.
• The road had been patched numerous times over five years due to ongoing drainage issues.
Despite repeated repairs, the road remained hazardous, and both townships had received
several complaints regarding its condition. The expert testimony presented by the plaintiff
indicated that not only bicyclists but also motorcyclists found the road surface hazardous.
• The court concluded that public entities may be liable for failing to address known
dangerous conditions that jeopardize the safety of both bicyclists and motorcyclists. The
opinion extends and clarifies principles set forth in earlier cases (Polzo I and Polzo II)
regarding public entity liability for road conditions under the New Jersey Tort Claims Act
(TCA).
• The appellate court ruled that the trial court erred in granting summary judgment,
particularly since the expert testimony was unrebutted and indicated a chronic safety issue
impacting both bicycles and motorcycles. The opinion highlights the duty of municipalities
to use appropriate repair methods and the need for roadways to be safe for all foreseeable
users, especially as the prevalence of bicycling increases.
• The case was remanded for further proceedings, acknowledging that there were genuine
issues of material fact regarding the municipality's control over the roadway and the
adequacy of their repairs.
CARE ONE---NHA CLAIM
Estate of Donville Campbell v. Woodcliff Health & Rehabilitation Center and Dr. Birinder
Kaur
Superior Court of New Jersey, Appellate Division
(Docket Nos. A-3177-22, A-3178-22)
Argued: January 18, 2024 | Decision Date: June 26, 2024
• The Appellate Division reversed the trial court's decision and dismissed the complaint with
prejudice, finding the defendants immune under New Jersey's COVID-19 Immunity
Statute. The case arose after Selva Campbell, a stroke patient, was discharged from
Woodcliff on April 14, 2020, without knowing the results of a COVID-19 test administered
by Dr. Kaur. The test subsequently returned positive, and Selva Campbell was informed
two days later. Her husband, Donville Campbell, contracted COVID-19 shortly after and
died from complications of the virus.
• The Estate of Donville Campbell sued Woodcliff Health & Rehabilitation Center and Dr.
Birinder Kaur for medical negligence, wrongful death, and a survival claim. Defendants
moved to dismiss the complaint, citing no duty of care to Mr. Campbell and immunity
under New Jersey's COVID-19 Immunity Statute and the Public Readiness and Emergency
Preparedness Act (PREP Act).
• The Appellate Division analyzed the nature of the duty owed, the foreseeability of harm,
and public policy considerations. It concluded that the legislative intent behind the COVID
Immunity Statute was to limit healthcare providers' liability to acts of gross negligence
during the emergency. The court found that the plaintiff failed to allege facts showing gross
negligence by the defendants in discharging Mrs. Campbell while awaiting her test results.
• Given the early stage of the pandemic and the unprecedented public health crisis, the court
determined that the defendants' actions did not meet the threshold of gross negligence.
Since the plaintiff could not plausibly plead gross negligence based on the alleged facts,
the court dismissed the complaint with prejudice, precluding any further claims on the
matter.
MEDICAID AND RFI
Sharon Desousa v. Ocean Convalescent Center, Inc.
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-2650-22)
Submitted: May 30, 2024 | Decision Date: June 10, 2024
• The court affirmed the dismissal of a negligence lawsuit against Ocean Convalescent
Center, Inc., doing business as Rose Garden Nursing and Rehabilitation Center, and its
administrator, Andrew Shawn. The trial court dismissed the complaint with prejudice due
to Desousa's failure to file an Affidavit of Merit (AOM) within the 120-day statutory period
as required by N.J.S.A. 2A:53A-27.
• Elizabeth Klossek, a resident at the Rose Garden Nursing and Rehabilitation Center, passed
away from COVID-19 on May 11, 2020. Desousa alleged that Klossek's death resulted
from negligent care by the defendants, reflected in an eight-count complaint. The
allegations included failure to provide adequate care in violation of specific New Jersey
statutes and regulations, negligence, wrongful death, gross negligence, and malpractice.
• The defendants countered, asserting immunity to COVID-19-related claims and
highlighting Desousa's non-compliance with the AOM requirement. The trial court granted
a Ferreira conference and extended the AOM filing deadline to November 2, 2022, but
ruled that the AOM filed on November 4 was untimely.
• Desousa argued on appeal that the AOM was unnecessary due to common knowledge
exceptions and improper classification of Rose Garden as a health care facility. The
appellate court conducted a de novo review, affirming the trial court's decision. It clarified
that Rose Garden, as a "long-term care facility," qualifies as a health care facility under the
statutory definitions, with the AOM requirement applicable.
• The court also found no extraordinary circumstances warranting relief from the AOM
statute and deemed the common knowledge exception inapplicable because the complex
nature of medical protocol during the pandemic is not common knowledge.
• The appellate court held that Desousa's failure to file a timely AOM, integral in
demonstrating a non-frivolous basis for the malpractice claim, justified dismissal with
prejudice. The thorough analysis included statutory interpretation, legislative intent, and
precedents on the common knowledge exception and extraordinary circumstances
surrounding AOM requirements. The dismissal was thereby affirmed, concluding that the
plaintiff's arguments did not circumvent the statutory obligations under N.J.S.A. 2A:53A-
27.
PREMISES LIABILITY
Hsi Rung Niu-Wang v. Hillside Estates
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-0368-23)
Argued: June 18, 2024 | Decision Date: July 3, 2024
• The plaintiff appealed a summary judgment granted to the defendant in a slip-and-fall
personal injury case. The incident occurred on January 5, 2022, when freezing rain caused
black ice on the pathways in the Winding Woods Apartments complex, resulting in the
plaintiff’s injury. The plaintiff argued for expanding the duty of care established in the
Pareja v. Princeton International Properties case to include pre-treating commercial
sidewalks when landowners have actual or constructive knowledge of an impending storm.
• The trial court, referencing Pareja, ruled that commercial landowners are not required to
treat walkways before or during a storm, leading to a summary judgment in favor of the
defendant. The Appellate Division reviewed the decision de novo and upheld the lower
court’s ruling, emphasizing the ongoing storm rule from Pareja, which obligates
commercial landowners to address snow and ice accumulations only after a storm has
ended.
• The court found no genuine issue of material fact, noting that the plaintiff’s injury occurred
during the storm and that there was no ice before it began. The decision was also influenced
by the recent Supreme Court case of Padilla v. Young II An, but the court ruled that they
were bound by Pareja precedent, which does not impose a duty on landowners to pre-treat
walkways even with knowledge of an impending storm. Consequently, the Appellate
Division affirmed the summary judgment in favor of Hillside Estates.
TRUST INTERPRETATION
In re Trusts Under Agreement of Alfred N. Sanzari
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket Nos. A-3612-21, A-3613-21, A-3614-21, A-3616-21)
Argued: May 13, 2024 | Decision Date: July 1, 2024
• In consolidated appeals, defendants Ben and Carl Sanzari contested orders excluding Carl,
Ben's adopted son, from class gifts within two family trusts established by Alfred and Mary
Sanzari. The primary issue revolved around whether the term "adopted children" in the
trust documents included Carl, who was adopted as an adult.
• Initially, the trial court denied summary judgment for the defendants, applying the "stranger
to the adoption" doctrine which presumes against the inclusion of adult adoptees in class
gifts unless evidence shows the settlors' probable intent to include them. Defendants were
unable to overcome this presumption at trial, citing insufficient evidence and inconsistent
testimonies regarding the settlors' intentions.
• The court detailed the trusts' language, Alfred and Mary's estate planning history, family
relationships, and the dynamics around Carl's adoption and interactions with the Sanzari
family. Specific facts emphasized included Alfred knowing Carl only briefly and under the
context of employment, the lack of specific bequests to Carl from Mary, and that Ben's
testimony about Alfred's and Mary's intentions was inconsistent and legally insufficient.
• Ultimately, the appellate court upheld the trial court's decisions, affirming that the trusts
did not include Carl under the legal definition of "children" or "issue," and thus did not
entitle him to the class gifts intended for Ben's biological children. The plaintiffs' alleged
scheme to include Carl in the trusts was likewise not supported by sufficient evidence.
TRUST MANAGEMENT
In the Matter of the Yael Silberberg 2012 Appointed Trust
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket Nos. A-0813-22, A-1906-22)
Submitted May 15, 2024 | Decision Date: June 3, 2024
• Yael Silberberg contested several court orders relating to the management of the Yael
Silberberg 2012 Appointed Trust, established by her father, Daniel Weingarten. Key issues
included the allocation of Guardian Ad Litem (GAL) fees for her children and a contempt
complaint filed by Yael against the GAL and Trustee Earl Smith.
• An underlying factor was the extensive litigation history, with Daniel Weingarten creating
trusts to ensure financial security for his children, including Yael, while maintaining control
over the assets. Conflicts arose when Yael's husband, Avi Silberberg, opposed certain
family financial agreements, leading to Daniel's concerns about asset interference.
• Yael challenged a September 2022 order requiring the trust to pay the GAL's $23,097.84
fee, arguing procedural violations and improper application. She also opposed the dismissal
of her contempt complaint which alleged the GAL and Trustee conspired to embezzle trust
funds without proper court procedures.
• The court affirmed the orders under appeal. It supported the award of fees to the GAL,
finding the proper procedure was followed. The judge applied the lodestar method, deemed
the hourly rate customary, and concluded Yael's opposition lacked merit. The court also
dismissed Yael's contempt complaint with prejudice, finding no willful disobedience of
court orders and determining the GAL and Trustee had acted appropriately and in
compliance with prior court directives.
• Yael's appeal for summary relief based on the Trustee's alleged failure to answer her
complaint was denied. The court ruled the filing of a motion to dismiss was proper, and the
complaint failed to warrant discovery based on the provided allegations.
TERMINATION OF PARENTAL RIGHTS
New Jersey Division of Child Protection and Permanency v. Valerie S.
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-0360-23)
Submitted: July 9, 2024 | Decision Date: August 2, 2024
• Valerie S. (Valerie) sought to vacate the judgment terminating her parental rights to her
disabled daughter Maureen M.C. (Maureen), arguing that substantial changes in her
personal circumstances justified the re-evaluation of the termination order. After a history
of child protection interventions and her voluntary surrender of parental rights in 2017,
Valerie's appeal faced scrutiny under Rule 4:50-1 of the New Jersey Rules of Court.
• Valerie initially lost custody of Maureen in 2013 when the Division intervened following
her inability to meet Maureen's special medical needs. In 2014, the family court ruled that
Valerie had neglected Maureen's care, leading to Maureen's long-term residency in the
Children's Specialized Hospital. Despite attempts to regain custody through an initial
motion in 2019, which was denied, Valerie filed a second motion in 2022, fortified by
subsequent rehabilitative steps including her release from incarceration, sustained sobriety,
and other stability indicators such as employment and college enrollment.
• The court applied a two-prong test to Valerie's motion: assessing changes in circumstances
and considering Maureen's best interests. The court commended Valerie's improved
situation but ruled that the proof was insufficient to demonstrate her capability to meet
Maureen's extensive medical needs independently. Moreover, the court emphasized the
paramount importance of permanency and stability for Maureen, which was being provided
by her resource family.
• The appeal court upheld the family court's decisions, supporting that Valerie was given a
full and fair hearing and noting that Maureen's best interests, amidst her significant medical
dependencies, were best served through the stable environment with the resource family as
opposed to the speculative care scenario proposed by Valerie.
New Jersey Division of Child Protection and Permanency v. L.M.J. (“Lucy”)
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-2473-22)
Submitted: April 9, 2024 | Decision Date: May 10, 2024
• Lucy (L.M.J.) appealed the March 31, 2023 order terminating her parental rights to her son
John (J.E.J., III). The New Jersey Division of Child Protection and Permanency initially
intervened in April 2017 due to concerns about Lucy's ability to care for her first child, Isla
(I.J.). Despite various services provided by the Division, Lucy was unable to safely parent
Isla, leading to the termination of her parental rights and Isla's adoption by Maria (M.R.),
a resource caregiver.
• Following John's birth, similar concerns led to his removal from Lucy's custody and
placement with Maria, alongside his sister Isla. The Division offered multiple intensive
services and interventions, including supervised visitations, parenting classes, and therapy,
but Lucy was unable to demonstrate sufficient improvement to ensure John's safety.
• Lucy's intellectual difficulties, primarily diagnosed as borderline intellectual functioning,
significantly impeded her ability to parent, which was crucial in the court's decision.
Allegations against Maria, including concerns about her romantic partner and a past
domestic violence incident, were considered but ultimately determined by the judge to not
invalidate her as the best caretaker for John.
• The appellate court affirmed the trial court's decision, emphasizing that the Division met
the statutory criteria under N.J.S.A. 30:4C-15.1(a), namely that Lucy could not provide a
safe environment for John, reasonable efforts were made to help her, and termination of
her parental rights would not cause more harm than good. The court accorded significant
deference to the trial judge's assessment of witness credibility and factual findings,
deeming these supported by adequate, substantial, and credible evidence.
New Jersey Division of Child Protection and Permanency v. D.W.
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket No. A-2764-22)
Submitted: May 7, 2024 | Decision Date: May 14, 2024
• The Superior Court of New Jersey, Appellate Division, upheld the trial court's decision to
terminate D.W.'s parental rights over his child, Z.S.S. The appellant, D.W., argued that the
New Jersey Division of Child Protection and Permanency (the Division) failed to meet the
statutory requirements for terminating parental rights under N.J.S.A. 30:4C-15.1(a) and
claimed the virtual trial was unconstitutional.
• Despite D.W.'s claims, the court found overwhelming evidence supporting the Division's
case, including D.W.'s failure to attend court proceedings, lack of commitment to the child's
well-being, and failure to maintain contact or complete required evaluations. The trial court
determined that maintaining the current foster placement was in the child's best interest due
to the stable environment provided by the resource parent, who was addressing the child's
multiple special needs.
• The appellate court noted that D.W. had not visited the child in person and had only
participated in virtual visits, despite having access to virtual platforms in previous
proceedings. The decision emphasized the importance of a permanent, safe, and secure
home for the child, underscoring that further delays would be detrimental. The court
concluded that all procedural and substantive requirements were met, and the trial was
conducted fairly, thus affirming the termination of D.W.'s parental rights.
COMMERCIAL CONTRACTS
Douglas Schwarzwaelder v. BHC Marketing, Ltd. et al.
Superior Court of New Jersey, Appellate Division
Unpublished Opinion | (Docket Nos. A-2362-22, A-2593-22)
Argued: April 24, 2024 | Decision Date: July 15, 2024
• Plaintiff Douglas Schwarzwaelder sought to enforce two "marketing agreements" against
Defendants BHC Marketing, Ltd., Dressander & Associates, Inc., Simplicity Financial
Marketing, Inc. (SFMI), and Simplicity Financial Group Holdings, Inc. After a two-day
bench trial, the trial judge awarded Schwarzwaelder $245,687.98 from SFMI, finding that
SFMI breached a non-solicitation clause in the agreements, and Schwarzwaelder appealed
this decision.
• The underlying agreements, dating back to 2011, were between various combinations of
entities including Dressander, BHC Marketing, Safe Harbor Financial, Inc., and plaintiff
Schwarzwaelder. The terms included provisions regarding marketing incentives,
compensation based on twenty-five basis points (.25%) of sales, and a detailed non-
solicitation clause.
• The Appellate Division reversed the trial court's judgment, emphasizing that such a non-
solicitation claim was never properly pleaded or notified to the defendants. The court
stressed that due process forbids the imposition of new theories of liability after a case's
submission without notice and without giving the opposing party a chance to defend
effectively.
• Plaintiff's partial appeal contested three main points: exclusion of expert testimony, validity
of modification claims, and the determination that agreements were terminable at will. The
appellate court ruled the exclusion of the expert's testimony fair due to credibility issues.
It affirmed that modification claims failed without mutual consent and the absence of valid
written modifications. It also upheld that the marketing agreements, devoid of explicit
perpetual terms, were terminable at will.
• The appellate court reversed the trial judgment and portions of the subsequent order,
remanding the case with instructions to enter judgment in favor of defendants, definitively
ruling against the claims for damages based on the non-solicitation clause breach.
AGENCY DECISIONS
A.C. v. Horizon NJ Health
New Jersey Department of Human Services, Division of Medical Assistance and Health Services
Decision Date: June 26, 2024
• A.C. appealed Horizon's reduction of Private Duty Nursing (PDN) hours for her child from
sixteen hours per day to twelve hours per day starting September 1, 2023. The reduction
was based on a PDN Acuity score between twenty-eight and thirty-five points, which
qualifies for up to twelve hours of PDN services per day.
• The petitioner, a ten-year-old with multiple severe health conditions, was initially assessed
a PDN score of 32.5 in 2019, warranting sixteen hours of PDN. A reassessment on July 5,
2023, showed improvements, justifying the reduction in PDN hours. The updates included
fewer needed clinical assessments, no longer required central line management, and a
reduction in other care complexities.
• Assistant Commissioner Gregory Woods adopted the Initial Decision on June 26, 2024,
affirming the reduction in PDN services. However, Woods noted that since a year had
passed since the last reassessment, Petitioner's current status must be reassessed.
C.S. v. Morris County Office of Temporary Assistance
New Jersey Department of Human Services, Division of Medical Assistance and Health Services
Decision Date: June 17, 2023
• C.S. appealed Morris County's determination of Medicaid eligibility starting in May 2023,
seeking retroactive coverage from February 2023. The county initially notified C.S. of
eligibility starting in February 2023 but later changed this to May 2023, due to an
assessment that the Petitioner's resources exceeded $2,000, specifically due to a life
insurance policy.
• The ALJ found that Morris County disregarded Medicaid Communication 18-08 and noted
that up to $1,500 in life insurance policy funds should be exempt for burial expenses. Only
$58.78 of the life insurance policy's value should be considered in resource calculations
for February to April 2023.
• Assistant Commissioner Jennifer Langer Jacobs adopted the ALJ's findings and
conclusions, setting the eligibility date for C.S.'s Medicaid benefits to February 1, 2023.
C.S. v. Division of Aging Services (DoAs)
New Jersey Department of Human Services, Division of Medical Assistance and Health Services
Decision Date: June 19, 2024 (ALJ has until June 24, 2024, to render a Final Agency Decision)
• C.S. was denied clinical eligibility for Medicaid and long-term care services by the
Division of Aging Services (DoAs) on August 15, 2023. The denial was based on an
assessment that the petitioner was not severely cognitively impaired or dependent on
physical assistance with three or more Activities of Daily Living (ADL).
• The petitioner's relatives provided testimony that C.S. needed reminders and assistance
with certain tasks and ADLs, challenging the initial assessment. Assistant Commissioner
Gregory Woods found that the initial decision did not sufficiently address whether the
petitioner met the eligibility criteria under the New Jersey FamilyCare Comprehensive
Demonstration Waiver, especially related to decision-making impairments and need for
supervision with ADLs.
• The Assistant Commissioner ordered the reversal of the Initial Decision and remanded the
case for further development of the record and more explicit credibility determinations
concerning the conflicting testimonies from the petitioner's family members and
caregivers.
D.M. v. Camden County Board of Social Services
New Jersey Department of Human Services, Division of Medical Assistance and Health Services
Decision Date: June 6, 2024
• D.M.'s Medicaid application was denied by the Camden County Board of Social Services
on October 11, 2023, due to excess income and resources. D.M. applied for Medicaid on
May 17, 2023, via their designated authorized representative. Camden County requested
additional documentation, including proof of gross pension amounts and the initiation of a
Qualified Income Trust (QIT).
• D.M. had listed two income sources, including $658.00 from Social Security
Administration and $2,077.60 from another source. Camden County's first request revealed
D.M.'s pension was $2,858.00, while the eligibility limit was $2,742.00. D.M.'s QIT listed
only the Social Security income, prompting a second request for corrections which were
not met. D.M.'s financial resources also exceeded the $2,000 limit set by regulations.
• Assistant Commissioner Jennifer Langer Jacobs adopted the ALJ's decision on June 6,
2024, affirming that Camden County correctly denied D.M.'s application based on
documentation and resource limits.
J.S. v. Essex County Board of Social Services
New Jersey Office of Administrative Law (OAL Docket No. HMA 13535-23)
Decision Date: April 30, 2024
• J.S. appealed the Essex County Board of Social Services' decision to terminate his
Medicaid benefits, arguing that he did not exceed the allowable resource limit. The Agency
initially notified J.S. on November 8, 2023, that his benefits would end due to having
resources over the $4,000 limit, specifically $4,260.96 in his bank account.
• Administrative Law Judge Julio C. Morejon determined that the correct balance to consider
was $3,721.54 from August 2023, which is below the $4,000 resource limit. Judge Morejon
concluded that the Agency incorrectly assessed J.S.'s resources and should have granted
his Medicaid benefits application. Consequently, the decision to terminate J.S.'s Medicaid
benefits was reversed, granting him resource eligibility under the ABD program.
L.B. v. Essex County Division of Family Assistance & Benefits
New Jersey Office of Administrative Law (OAL Docket Nos. HMA 00900-24 and HMA 02330-24)
Decision Date: April 26, 2024
• L.B. contested the denial of her July 2023 Medicaid renewal for the Managed Long-Term
Services and Supports (MLTSS) program due to untimely submission of required
verifications. Essex issued two denials: October 17, 2023, and December 5, 2023, due to
missing necessary documentation.
• Essex made multiple attempts to contact L.B. and her daughter by phone to obtain the
required information. Only on April 15, 2024, did petitioner present the explanation letter
for deposits into her Chase account, which Essex did not originally receive.
• Administrative Law Judge Nanci G. Stokes concluded that L.B. was ineligible for
Medicaid due to her failure to provide timely the required verifications and did not fall
under "exceptional circumstances." The ALJ dismissed L.B.'s appeal.
M.S. v. Middlesex County Board of Social Services
New Jersey Department of Human Services, Division of Medical Assistance and Health Services
Decision Date: June 6, 2024
• M.S. filed a Medicaid application on March 1, 2023, with the Middlesex County Board of
Social Services. After multiple requests for additional information, Middlesex County sent
a final request on August 14, 2023, with a deadline of August 28, 2023. When no response
was received by the deadline, M.S.'s application was denied on September 6, 2023.
• M.S.'s attorney claimed a delay in USPS mail delivery and stated they did not receive the
August 14 letter until September 11, 2023. The Assistant Commissioner found no legally
competent evidence to support the ALJ's finding of exceptional circumstances requiring an
extension, noting the absence of witnesses and exhibits related to the August 14, 2023,
letter.
• The Order of Remand reverses the Initial Decision and remands the matter to the Office of
Administrative Law (OAL) to further develop the record concerning the August 14, 2023
request for information and M.S.'s failure to respond.
M.S. v. Horizon New Jersey Health
New Jersey Department of Human Services, Division of Medical Assistance and Health Services
Decision Date: June 19, 2024
• M.S. challenged Horizon New Jersey Health's decision to reduce Private Duty Nursing
(PDN) services for her 7-year-old child from 16 hours per day, seven days a week to 10
hours per day, seven days a week, effective September 2, 2023. An August 2023
reassessment using a PDN Acuity Tool scored Petitioner at 25 points, correlating to an
eligibility of 4-8 hours of PDN services per day.
• Despite the reassessment score, Horizon authorized 10 hours of PDN per day due to
Petitioner's 10-hour overnight g-tube feeding requirement. The Administrative Law Judge
(ALJ) found that the Petitioner's medical needs did not align with those requiring more
than 10 hours of PDN per day as specified in the regulations.
• Based on the review, Assistant Commissioner Jennifer Langer Jacobs affirmed and adopted
the Initial Decision to reduce PDN services on June 19, 2024. The reduction to 10 hours
per day of PDN services was deemed appropriate under N.J.A.C. 10:60-5.4.
R.N. v. Ocean County Board of Social Services
New Jersey Department of Human Services, Division of Medical Assistance and Health Services
Decision Date: June 24, 2024
• Ocean County Board of Social Services terminated R.N.'s Medicaid benefits on September
19, 2023, because R.N.'s monthly income of $2,885.78 exceeded the program limit of
$1,677. R.N.'s income was verified via employment and wage reports.
• The Initial Decision confirmed the termination, and as per N.J.A.C. regulations, R.N.'s
income did not meet the required criteria for Medicaid eligibility. There is no provision to
relax or waive these income limits.
• Assistant Commissioner Gregory Woods adopted the Initial Decision and upheld the
termination of Medicaid benefits on June 24, 2024.
S.S. v. Burlington County Board of Social Services
New Jersey Department of Human Services, Division of Medical Assistance and Health Services
Decision Date: June 18, 2024
• S.S. appealed the denial of her Medicaid application by the Burlington County Board of
Social Services. The denial, dated March 21, 2023, was based on S.S. being over the
resource limit for Medicaid eligibility due to co-owning and then inheriting a property from
her deceased brother. S.S. sold the inherited property, receiving $206,817.95 on November
25, 2022, and later transferred cash to her nephew, D.S., which resulted in a Medicaid
penalty calculation indicating a 591-day penalty.
• The Administrative Law Judge (ALJ) granted Burlington County's cross-motion for
summary decision, affirming the denial based on the conclusion that S.S. had access to the
transferred funds for private payment. However, the DHS Assistant Commissioner found
the record does not support the Initial Decision's conclusion and identifies genuine issues
of material fact.
• The Assistant Commissioner reversed the Initial Decision and remanded the matter to the
Office of Administrative Law (OAL) for further record development, including clarifying
the private pay agreement and details on financial transfers between S.S. and her nephew.
V.P. v. Ocean County Board of Social Services
New Jersey Department of Human Services, Division of Medical Assistance and Health Services
Decision Date: June 25, 2024
• V.P. challenged the imposition of a 564-day Medicaid transfer penalty by the Ocean County
Board of Social Services. The penalty was due to asset transfers totaling $211,231.63 for
less than fair market value, within the five-year look-back period. V.P. argued the transfers
were to reimburse V.P.'s son, G.P., for home repairs and renovations.
• Ocean County ruled the assets as gifts due to lack of formal loan agreements and inadequate
documentation. Petitioner's home was valued at $402,959.01 in 2020, and sold for
$651,000 in December 2021, with significant proceeds going to G.P.
• Documentation discrepancies and lack of credible evidence regarding the financial
transactions and reimbursements led to the conclusion that the transfers were not bonafide
loan repayments. Assistant Commissioner Gregory Woods adopted the ALJ's initial
decision and upheld the penalty on June 25, 2024.
D.M. v. Cumberland County Board of Social Services
New Jersey Office of Administrative Law
(OAL Docket No. HMA09682-23)
Record Closed: March 22, 2024 | Decided: April 11, 2024
• D.M. contested a 196-day Medicaid transfer penalty imposed by the Board due to the sale
of his home for less than its determined fair market value during the five-year look-back
period for Medicaid eligibility. Initially, the Board found that the petitioner sold his house
in an age-restricted community for $255,000, while the fair market value was assessed at
$328,468.63.
• Upon appeal, the petitioner introduced a real estate appraisal by certified appraiser Mendy
Goldstein, which valued the property at $250,000 as of the original sales date. Testimony
and affidavits highlighted the extremely poor internal condition of the home, including
extensive damage and unsanitary conditions, which deterred potential buyers and justified
the lower sale price.
• Administrative Law Judge William T. Cooper III found the petitioner's evidence credible,
emphasizing testimony about the house's deplorable condition, the advice of a professional
real estate agent, and the lack of any offers approaching the calculated fair market value.
Noting that the tax assessed value does not necessarily reflect the fair market value and
that the sale was unlikely conducted to establish Medicaid eligibility, the Judge reversed
the transfer penalty.
• This decision underscores the importance of credible, detailed evidence in rebutting the
presumption that asset transfers below market value are primarily meant to establish
Medicaid eligibility, indicating that actual market conditions and property states are crucial
considerations.
S.K. v. Hudson County Department of Family Services
New Jersey Office of Administrative Law
(OAL Docket No. HMA00084-24)
Record Closed: April 5, 2024 | Decision Date: April 11, 2024
• S.K. challenged the termination of his New Jersey Family Care health coverage by the
Hudson County Department of Family Services on the basis of being over the income limit.
The key issue was whether S.K.'s contributions to an Individual Retirement Account (IRA)
should be included in his income calculation for eligibility purposes.
• The court's findings established that S.K. and his wife, both employed as teachers' aides,
contributed a substantial part of their gross income to their IRAs, thereby significantly
reducing their taxable income. It was determined that the Hudson County Department
miscalculated by including these IRA contributions in the income assessment.
• The Judge concluded that S.K.'s adjusted income, after allowable deductions, met the
eligibility requirements for NJ Family Care. The court ordered the reinstatement of S.K.
and his wife's health coverage, emphasizing that Medicaid eligibility under the ACA is
determined solely on income and not on assets or resources.
L.B. v. Essex County Division of Family Assistance and Benefits
New Jersey Office of Administrative Law
(OAL Docket No. HMA00900-24)
Record Closed: April 17, 2024 | Decision Date: April 26, 2024
• L.B. contested the Essex County Division's denial of her Medicaid renewal for the
Managed Long-Term Services and Supports (MLTSS) program, which was initially denied
for failure to provide requested verifications on time. Essex County sent two notices
requesting specific income information, but L.B. failed to submit all required documents
within the specified timelines.
• Despite Essex's multiple attempts to contact her and her daughter to obtain these
verifications, L.B. did not provide the necessary documentation until April 15, 2024. This
submission was considered too late and was deemed pertinent to a new application, not the
existing contested renewals.
• Administrative Law Judge Nanci G. Stokes determined that the Essex County Division
adhered to regulatory requirements in verifying eligibility factors and that L.B. did not
meet the burden of proof to establish her Medicaid eligibility. The ALJ concluded that
exceptional circumstances to excuse the delay were not present and dismissed L.B.'s
appeal, affirming her ineligibility due to non-compliance with verification requirements.
M.P. v. Monmouth County Division of Social Services
New Jersey Office of Administrative Law
(OAL Docket No. HMA02821-23)
Record Closed: April 23, 2024 | Decision Date: April 25, 2024
• M.P.'s appeal against the Monmouth County Division of Social Services (MCDSS)
regarding Medicaid eligibility for nursing-home benefits was dismissed due to multiple
nonappearances by the Designated Authorized Representative (DAR), Malky Fink of
Elderguide, during scheduled telephone conferences and lack of subsequent explanation
for these failures to appear.
• It was noted that the petitioner, M.P., died on August 12, 2023, and no executor for the
estate had been assigned. Administrative Law Judge Mary Ann Bogan emphasized that
Fink's authority to represent M.P. ceased upon M.P.'s death as outlined in New Jersey
Statute Annotated (N.J.S.A.) 46:2B-8.5.
• The ALJ concluded the lack of standing and good cause by the petitioner's DAR warranted
dismissal of the appeal. The decision awaits further action by the Assistant Commissioner
of the Division of Medical Assistance and Health Services.
C.H. v. Hunterdon County Board of Social Services
New Jersey Office of Administrative Law
(OAL Docket No. HMA02983-24)
Record Closed: April 16, 2024 | Decision Date: April 23, 2024
• C.H. appealed the Hunterdon County Board of Social Services' (HCBSS) decision to
terminate her Medicaid benefits, arguing that the standards considering her marital status
are unlawful. It was established that C.H.'s and her spouse's combined income of $4,106.80
far exceeded the eligibility limit for Medicaid Aged, Blind, Disabled (ABD) Programs,
which is set at $1,644.00 per month.
• During the hearing, George Rasare, a Family Service Worker from HCBSS, testified
confirming the income calculation and the proper application of the eligibility standards.
C.H.'s husband, J.H., argued that the consideration of marital status in determining
Medicaid eligibility was discriminatory. However, this argument was not upheld because
even under single person eligibility standards, C.H. would still be over the income limit.
• Administrative Law Judge Sarah G. Crowley concluded that the denial of benefits by
HCBSS was justified based on the evidence and applicable regulations. Consequently, the
petitioner's appeal was dismissed, and the decision to terminate C.H.'s Medicaid benefits
was affirmed.
V.P. v. Ocean County Board of Social Services
New Jersey Office of Administrative Law
(OAL Docket No. HMA03517-23)
Record Closed: March 18, 2024 | Decision Date: April 8, 2024
• V.P. contested the imposition of a transfer penalty by the Board, which alleged that V.P.
transferred assets below fair market value to her son, G.P., without adequate
documentation. V.P. contended that the funds transferred were to reimburse G.P. for home
repairs and renovations essential for selling the home at a better price.
• V.P. moved to a long-term care facility in February 2020 and subsequently applied for
Medicaid in November 2022. Her property, assessed at $402,959.01 in 2020, was in severe
disrepair. G.P. obtained a $400,000 line of credit to fund V.P.'s nursing home costs and
home repairs. The property was sold in December 2021 for $651,000, whereby G.P.
received $397,512.60 from the sale proceeds as a loan payoff.
• Administrative Law Judge Judith Lieberman found that the transactions lacked credible
documentation, such as formal loan agreements or detailed descriptions of the work done,
necessary to establish the expenditures as reimbursements rather than gifts. Consequently,
the initial Board decision to impose a Medicaid transfer penalty was affirmed, highlighting
the importance of proper and thorough documentation when substantiating claims of
financial transactions within the Medicaid eligibility look-back period.
J.S. v. Essex County Board of Social Services
New Jersey Office of Administrative Law
(OAL Docket No. HMA13535-23)
Record Closed: April 9, 2024 | Decision Date: April 30, 2024
• J.S. appealed the Essex County Board of Social Services' decision to terminate his
Medicaid benefits, arguing that he did not exceed the allowable resource limit. The Agency
initially notified J.S. on November 8, 2023, that his benefits would end due to having
resources over the $4,000 limit, specifically $4,260.96 in his bank account.
• J.S., a 70-year-old Medicaid recipient since 2020, receives $1,215 in Social Security
benefits and additional financial assistance from relatives to manage his financial
obligations. Reviewing J.S.'s Wells Fargo bank statements from July to November 2023,
Administrative Law Judge Julio C. Morejon determined that the correct balance to consider
was $3,721.54 from August 2023, which is below the $4,000 resource limit.
• Judge Morejon concluded that the Agency incorrectly assessed J.S.'s resources and should
have granted his Medicaid benefits application. Consequently, the decision to terminate
J.S.'s Medicaid benefits was reversed, granting him resource eligibility under the ABD
program.
