The Financial Crimes Enforcement Network (FinCEN) requires businesses to file the Beneficial Ownership Information Report (BOIR) to ensure transparency and reduce money laundering risks fincen boir filing. However, many companies, especially small to mid-sized businesses, often make mistakes during the filing process. Below are some of the most common errors and tips on how to avoid them.
1. Failing to File on Time
The most critical mistake is missing the filing deadline. The BOIR is required to be filed within 30 days of the formation of a new entity or any changes to the beneficial ownership information. Failure to comply with this deadline can result in penalties. Make sure to set reminders and keep track of filing deadlines to avoid late submissions.
How to Avoid:
- Implement a calendar reminder for filing deadlines.
- Stay up-to-date with any changes in your business structure that could affect your filing timeline.
2. Incorrect or Incomplete Information
Many filings are rejected because they contain incomplete or inaccurate information about the beneficial owners. The report requires precise details, including the full legal name, date of birth, address, and government-issued identification number (e.g., passport or driver’s license) for each beneficial owner.
How to Avoid:
- Double-check all information before submitting, ensuring it matches official documents.
- Gather all necessary details in advance to ensure completeness and accuracy.
3. Not Understanding Who Qualifies as a Beneficial Owner
A common mistake is misunderstanding who qualifies as a “beneficial owner.” This term refers to individuals who directly or indirectly own or control 25% or more of the entity. Failure to identify all relevant owners can result in an incomplete or invalid submission.
How to Avoid:
- Review your company’s ownership structure carefully.
- Consult with a legal professional or accountant if you’re unsure about who qualifies as a beneficial owner.
4. Using Outdated or Incorrect Documents
The BOIR requires government-issued identification numbers and addresses. Using outdated or incorrect documentation can result in delays or rejections.
How to Avoid:
- Ensure all identification documents are up-to-date and valid.
- Provide the correct and current address for each beneficial owner.
5. Not Updating Changes in Ownership
If any changes occur in the ownership of your business, such as the addition or removal of beneficial owners, you must update the BOIR within 30 days of the change. Neglecting to update your filing can result in compliance issues.
How to Avoid:
- Monitor any changes in your business structure and update your filing promptly.
- Set up a process to track ownership changes so that you’re always prepared to file updates as needed.
6. Ignoring Privacy Considerations
While the BOIR is meant to ensure transparency, it’s essential to be aware of privacy concerns. Some business owners might be hesitant to provide certain personal information due to privacy reasons, but failing to disclose this information correctly can result in compliance issues.
How to Avoid:
- Understand the purpose of the BOIR and ensure you’re providing the necessary information, despite privacy concerns.
- If privacy is a major concern, consider seeking legal advice on how best to handle sensitive data.
7. Failing to Follow Filing Instructions
FinCEN has specific instructions for submitting the BOIR, including using the appropriate form and ensuring that all sections are filled out according to their guidelines. Some businesses overlook these instructions, leading to filing errors or rejections.
How to Avoid:
- Carefully read and follow the filing instructions provided by FinCEN.
- Use the official FinCEN portal for submission and verify that you’re completing all necessary fields.
8. Lack of Verification and Review
Submitting the BOIR without a final review can lead to errors that might not be caught in the initial draft. These errors can delay the filing process and may incur additional fees or penalties.
How to Avoid:
- Always have a second set of eyes review the BOIR before submission.
- Use a checklist to ensure all required fields and documents are completed correctly.
Conclusion
Filing your FinCEN BOIR may seem straightforward, but it comes with specific requirements that must be met accurately and on time. By avoiding the common mistakes listed above, you can ensure your business remains in compliance with federal regulations and avoid unnecessary penalties. Always stay informed, double-check your filing, and seek professional advice if needed. Proper filing today can save you time, money, and stress in the future.
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