Required Reporting to FINCen
The United States moved one step closer in December to requiring US companies to file reports with the US Treasury disclosing their beneficial owners.
Reports will also have to filed by foreign companies authorized to do business in the United States.
Existing entities must file reports within one year after an effective date that has still not been announced. FINCen, a bureau within the US Treasury that collects information about financial transactions in order to fight financial crimes, terrorist financing and money laundering, must finish building out a new computer system first to handle the data.
In the meantime, it issued 188 pages of proposed regulations and commentary in early December on the new reporting obligations.
New companies formed after the effective date will have to file reports within 14 days after formation.
An additional report will have to be filed within 30 days after any change in the information reported.
The reports must disclose the name, date of birth, residential address and a passport number, driver’s license or other unique identification number of every beneficial owner owning at least 25% of the company or having “substantial control.” Senior officers in the company are considered to have substantial control. Convertible debt instruments, options and warrants are considered ownership, as are debt instruments that allow the holder to exercise similar rights to an equity holder.
The same information must also be provided for the person who formed the company or directed that it be formed.
The company must also report all names under which it does business, its business address and a US taxpayer identification number or, if it does not have one, a Dun & Bradstreet DUNS number or LEI (legal entity identification number).
More than two million corporations and limited liability companies are formed every year in the United States.
There are 23 types of companies from whom reports will not be required. The exceptions include publicly-traded companies, large operating companies, utilities, insurance companies, banks, accounting firms, tax-exempt entities and registered broker-dealers.
Large operating companies are companies that have a real operating office and more than 20 full-time employees in the United States and that filed a federal income tax return the previous year reporting more than $5 million in gross income.