BOI Clarity: FinCen Chief Dispels 'Gotcha' Enforcement Fears

Beneficial Ownership Information ReportIn a recent statement to the House Committee on Financial Services, the Director of FinCen explained its mission and purpose in enacting the Corporate Transparency Act (CTA) which became effective at the first of this year.


A significant measure of the CTA is the Beneficial Ownership Information Report (BOI). FinCen head, Andrea Gacki, explained preparations taken by the agency to build a high-security, non-public database to house BOI information. As well, FinCen has taken the lead in information engagement by offering webinars, meetings, and events to educate the business community regarding BOI requirements.


Intended to provide and maintain business transparency, a BOI report is required to provide personally identifying information about anyone with ownership in a business. This includes information such as date of birth, full legal name, residential address, driver's license number, and passport images. The requirement pulls the veil from anonymous shell companies


In the first week, FinCen received BOI reports from more than 100,000 companies. By mid-February, more than 430,000 reports have been submitted. They are accessible only to law enforcement, federal, state, and local agencies, financial institutions, and other authorized users.


Ms. Gacki noted the CTA is intended to “close what has long been identified as a gap in the United States’ anti-money laundering and countering the financing of terrorism (AML/CFT) regime. Simply put, implementing the CTA helps untangle opaque corporate structures, allowing enforcement authorities to better pursue criminals and protect our national security.” AML/CFT is the acronym for anti-money laundering and combating the financing of terrorism.


In her statement, Ms. Gacki made efforts to assure the committee and larger audience that FinCen is not using the CTA or the Bank Secrecy Act to persecute small businesses. The Bank Secrecy Act of 1970 established the requirement for those who have an ownership in foreign bank accounts or assets to file an annual report of Foreign Bank Account and Financial Accounts (FBAR).


While explaining the broad reach of the CTA, Ms. Gacki emphasized the BOI is not intended to harvest information on which to create prosecutorial opportunities. She states, “I want to clearly state that FinCEN has no interest in hitting small businesses with excessive fines or penalties. The CTA penalizes willful violations of the law, and we are not seeking to take “gotcha” enforcement actions. Looking ahead, we will continue our efforts to promote compliance with the reporting requirements and ensure broad awareness of the safe, secure, and easy-to-use filing system.”


The need for an ownership information tool to combat tax crime and stem international money laundering has long been discussed. With the BOI, it appears to have arrived.


Talk with our tax attorney today if you have questions about a BOI, or are concerned about a foreign bank account

Serving local and international clients from offices in Chicago and Cleveland, the legal team at Robert J. Fedor, Esq., LLC provides experienced legal defense on matters of tax litigation, tax crime, or IRS audits. Call 800-579-0997 or contact us online today.


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