Top 3 Challenges Associated with Beneficial Ownership Information Reporting

The US Corporate Transparency Act (CTA), which became effective on January 1, 2024, aims to help address illicit activities in the country. Like the AML (anti-money laundering) act, CTA aims to prevent the misuse of companies (limited liability companies & corporations) for money laundering activities. In addition, it also prevents the misuse of these companies for terrorist financing.

That said, if you own a corporation or limited liability company and run your business in the United States, the CTA requires you to report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). Willful failure to do this attracts two different types of penalties; civil and criminal penalties. Even if you end up doing the BOI reporting, you may still be penalized if found providing inaccurate information.

As a small company, to avoid being penalized, it’s crucial to understand the challenges associated with BOI filling and how to avoid them. As you read on, you’ll find all you should know about these challenges.

1.  Complexity of ownership structures

Complexity of ownership structures is one of the many challenges that companies face when it comes to BOI filling. Imagine having a company that’s owned by another company, which is further owned by yet another organization. In this case, challenges are most likely to surface during the BOI filling due to the different layers of ownership.

• One challenge is likely to surface during the process of identifying the real entity that possesses the ultimate control.
• Sadly, without being sure of the real person in charge of control, it becomes pretty hard to carry on with the business entity reporting.

If your company currently faces this issue, one way to address it is by hiring a reputable CTA compliance services provider, such as FinCEN Reporting. This firm has the expertise and experience necessary to navigate complex ownership structures. They’ll ensure you remain compliant and avoid being penalized by the regulating bodies.

2.  Technology challenges

This problem mostly affects small companies looking to carry out their BOI reporting to FinCEN. This is especially true if the company has inadequate or out-of-date technology. In this case, acquiring information and organizing it may become messy. Without the right technology, it becomes pretty challenging to identify what names to include in the BOI reporting. Sadly, providing inaccurate beneficial ownership information to FinCEN attracts both civil and criminal penalties.

One effective way to address this challenge is by hiring a Corporate Transparency Act (CTA) compliance services provider. For instance, FinCEN Reporting has updated technology solutions in place. These solutions will help you streamline the entire BOI filling process, ensuring you avoid getting penalized for inaccurate beneficial ownership information.

3.  Data accuracy & verification

BOI reporting is a lot easier when dealing with local entities. When it comes to international entities, companies tend to encounter different challenges:

• First, companies struggle hard to verify the accuracy of beneficial ownership information. This is due to the diverse legal frameworks for acquiring and verifying BOI in different countries.

Unless you work with compliance services providers, you may spend a lot of time trying to verify the accuracy of information provided to your company.

The best CTA compliance services provider also specialize in global regulatory compliance. A reputable firm will use their expertise in cross-border regulations to ensure your company stays compliant when acquiring and verifying BOI. The right compliance firm won’t encounter any language barriers when engaging the international entities to acquire BOI. Besides, this firm also uses advanced technology, which makes the collection and verification of information easier.

Facing any of the aforementioned challenges of BOI reporting to FinCEN? If yes, you can hire FinCEN Reporting today for proper guidance with your BOI filling.