To enhance transparency and combat financial crimes, the Financial Crimes Enforcement Network (FinCEN) has implemented the Corporate Transparency Act, mandating reporting companies to disclose beneficial ownership information (BOI). While FinCEN aims to guide reporting entities through this process, it is crucial to understand the severe consequences that may follow in case of non-compliance. (Also see: Why do I have to file beneficial ownership information?)
A person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to 2 years imprisonment and a fine of up to $10,000.
Potential violations include:
Senior officers and individuals qualifying as beneficial owners or company applicants must recognize their responsibilities in ensuring accurate and complete reporting. Intentionally refusing to provide required information or supplying false data with the knowledge that it will be reported to FinCEN can have severe consequences.
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Both individuals and corporate entities can be held liable for willful violations. This can include not only an individual who actually files (or attempts to file) false information with FinCEN but also anyone who willfully provides the filer with false information to report. Both individuals and corporate entities may also be liable for willfully failing to report complete or updated beneficial ownership information; in such circumstances, individuals can be held liable if they either cause the failure or are a senior officer at the company at the time of the failure.
Yes. An individual who willfully files a false or fraudulent beneficial ownership information report on a company’s behalf may be subject to the same civil and criminal penalties as the reporting company and its senior officers.
Yes. As described above, an enforcement action can be brought against an individual who willfully causes a reporting company’s failure to submit complete or updated beneficial ownership information to FinCEN. This would include a beneficial owner or company applicant who willfully fails to provide required information to a reporting company.
Yes. It is the responsibility of the reporting company to identify its beneficial owners and company applicants and to report those individuals to FinCEN. At the time the filing is made, each reporting company is required to certify that its report or application is true, correct, and complete. Accordingly, FinCEN expects that reporting companies will take care to verify the information they receive from their beneficial owners and company applicants before reporting it to FinCEN.
FinCEN recognizes the possibility of unintentional errors in submitted reports. If a reporting entity identifies inaccuracies within a filing and voluntarily submits a corrected report within 90 days of the original deadline, the Corporate Transparency Act provides a safe harbor from penalties. This emphasizes the importance of quickly rectifying any inadvertent mistakes in the information you provided.
In conclusion, as part of the Corporate Transparency Act, businesses must file a Beneficial Ownership Information Report to avoid criminal and civil penalties. FinCEN's guidelines aim to facilitate compliance, offering a safe harbor for unintentional errors. However, willful non-compliance, submission of false information, or inducing non-compliance can result in severe penalties. You can begin your hassle-free compliance journey with ComplyBOI.com, ensuring timely and precise filings.
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