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Corporate Transparency Act BOI Rule

United States

2021

AML/CFT

Tax & Reporting

Overview

The Corporate Transparency Act (CTA), passed in 2021 as part of the U.S. Anti-Money Laundering Act (AMLA), introduced a new requirement for certain legal entities to report their Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN). The implementing BOI Rule, effective January 2024, is designed to close loopholes that allow criminals to hide behind anonymous shell companies, strengthening U.S. efforts against money laundering, terrorist financing, and tax evasion.

The rule requires covered entities such as corporations, limited liability companies (LLCs), and similar entities to disclose individuals who own 25% or more of the company or exercise substantial control. Unlike the FinCEN CDD Rule, which applies to financial institutions, the BOI Rule directly applies to the companies themselves at formation and during major ownership changes.

This regulation is especially relevant to corporate service providers, law firms, accounting firms, small and mid-sized businesses, and compliance teams in financial institutions, since reported data will be available to regulators, law enforcement, and (with safeguards) financial institutions conducting CDD.

Key Obligations

Covered entities must report beneficial ownership information to FinCEN at formation and update it within 30 days of changes
Identify individuals with ≥25% ownership and those with substantial control
Maintain accuracy of filings to avoid penalties

FinCEN will store BOI in a non-public, secure database accessible only to authorized users
Certain entities (e.g., large operating companies, regulated financial institutions) are exempt

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Related Regulations

Bank Secrecy Act AML Law

FinCEN CDD Beneficial Ownership Rule

USA PATRIOT Act AML Provisions

FAQ

Who must report under the BOI Rule?

Most corporations, LLCs, and similar entities formed or registered in the U.S., unless exempt.

What information must be reported?

Full name, date of birth, address, and an ID number (e.g., passport or driver’s license) of beneficial owners and company applicants.

Is the database public?

No. BOI will be stored in a secure FinCEN system, accessible only to law enforcement, regulators, and authorized institutions.

What are the penalties for non-compliance?

Civil fines of up to $500 per day, criminal fines up to $10,000, and potential imprisonment.