Questions about identifying Beneficial Owners
Q: What is beneficial ownership information?
A: Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company. Once you have identified your company’s beneficial owners, you will need to provide their name, address, government-issued photo ID number and type and a copy of that ID for each beneficial owner.
Q: What are acceptable forms of identification for beneficial owners?
A: The following are acceptable:
- A non-expired driver’s license issued by any US state, commonwealth, territory, or possession;
- A non-expired identification document with a photograph issued by the US, a state, or a local government or Indian Tribe;
- A non-expired US passport; or
- A non-expired passport issued by a foreign government (only if the person does not have one of the other three forms of ID listed above).
Q: What if I’ve identified a beneficial owner and do not have a copy of their physical ID?
A: FinCEN requires that you provide identification proof for this individual. If they are refusing to provide it to you, ask them to obtain a FinCEN Identifier at https://fincenid.fincen.gov, where they can provide their information directly to the government and receive a FinCEN ID through Login.gov. Then they can provide you with their FinCEN ID number and you can enter it for that person without needing anything further from them. Otherwise, the law requires that you obtain their government issued photo ID. Submitting the report without that person would result in your filing an inaccurate report which will subject you, the person refusing to provide the ID, and your company, to a penalty of $591 per day until the report is updated with that person’s proper information. Our site will not allow you to submit a report without proper identification uploaded for each beneficial owner. We require this because the government requires this, and the government will not allow a report to be uploaded without each beneficial owner’s ID uploaded for that person.
Q: What if someone I identified as a beneficial owner refuses to provide me with their information or ID?
A: FinCEN requires that their information be reported. Warn them that FinCEN has announced it will fine any person who refuses to provide accurate information $591 per day until the correct information is provided. FinCEN may also have criminal charges brought against this person and they could end up in prison for two years. Both the company, the reluctant beneficial owner, and the person(s) responsible for submitting information for the BOI Report will be fined $591 per day until the correct information is provided. The penalty does not just apply to the company. It applies to anyone who refuses to provide the required information. The criminal penalties (imprisonment) are reserved for individuals who do not provide accurate information on time—you can’t put a company in prison—so it is safe to assume that the criminal penalties are reserved for just this sort of situation, where a beneficial owner refuses to provide both their information and an image of their government-issued photo ID.
Q: What if I’m not sure if a person is a beneficial owner?
A: While FinCEN has strict and harsh penalties for underreporting ($591 per day that an inaccurate report is on file), there is no penalty for overreporting. When in doubt, report the person as a beneficial owner. It behooves you financially to overreport if there is doubt about whether a person is a beneficial owner.
Q: Should I include past owners in my report, or only current owners?
A: An initial BOI Report should only include current owners as of the time of filing. If this changes, the company has 30 days in which to correct or amend its report or penalties will apply.
Q: What if a beneficial owner has died?
A: If there has been a probate of their will or administration of their estate, then the heirs taking that equity now are beneficial owners if any individual owns 25% or more of the company’s equity. If the person died recently and their estate has not been administered or probated, then the executor/administrator of the estate would be the beneficial owner until the shares are passed to the beneficiaries (who, again, would become beneficial owners if any individual obtains 25% or more of the equity of the company, which means the company would have to file an update within 30 days of the administration/disbursement of the estate). This would only matter if the decedent was an equity owner of the company. If a person who had substantial control over a company died, that power would likely be reassigned by the company into another individual at the company. The death of a beneficial owner will likely result in two updates: updating with the name of the executor/administrator of the estate, and another update identifying the person who was awarded the stock/shares through the probate of the deceased’s estate. Both of these updates need to be made within 30 days of the change in status.
Q: What if my company has no beneficial owners?
A: Every company has at least one beneficial owner. FinCEN mandates that each company provide the name of at least one person who owns the company. In FinCEN’s view, there is no company that is not owned by anyone or controlled by anyone. A starting point for determining who owns the company, even if it has no assets, is who would be responsible for opening a bank account for the company if it received a check? Who would have authority to write a check for the company if it had assets?
Q: Why does it matter if some person or company owns 25% or more of my business?
A: FinCEN has chosen 25% as the magic number for someone it considers to be a beneficial owner of a company. If you have stockholders or shareholders who own less than that, they do not need to be reported. If a business owns 25% or more of your company, then we have to determine who the individuals are at that company who need to be reported as beneficial owners. If a company owns the company that owns your company, FinCEN requires us to keep going down the line until we can identify a person who is the beneficial owner of 25% or more of your business.
Q: What is the difference between an equity owner and a person who has substantial control? Are both considered beneficial owners?
A: Equity owners are what we are calling individuals who own 25% or more of your company. They are considered beneficial owners. A person who directly or indirectly exercises substantial control over your business is also considered a beneficial owner. FinCEN wants you to identify people in both categories. There must be at least 1 person who owns the company and there must be at least one person who has substantial control over the company. This can be the same person. If a company is only owned by one person and that person makes all the decisions for that company, then that person is the only beneficial owner and only needs to be listed once in the report.