Introduction
As of 2024, many businesses in the U.S. are required to submit BOI (Beneficial Ownership Information) filings to FinCEN. But what is the purpose of BOI filing, and why is it now mandatory?
Let’s break down the intent behind this new compliance requirement under the Corporate Transparency Act (CTA) and how it affects your business.
What Is BOI Filing?
BOI filing is the process of submitting details about the beneficial owners of a business—those who own or control at least 25% of the company—to the Financial Crimes Enforcement Network (FinCEN).
This includes names, addresses, dates of birth, and government-issued ID numbers.
What Is the Purpose of BOI Filing?
The main purpose of BOI filing is to improve corporate transparency and help law enforcement detect and prevent financial crimes. Here’s why it matters:
1. Prevent Money Laundering and Terrorism Financing
By requiring disclosure of who truly owns and controls companies, the U.S. government can:
- Expose shell companies used for illegal activity
- Prevent terrorists and criminals from hiding behind anonymous entities
2. Combat Fraud and Corruption
BOI filings make it harder for bad actors to:
- Commit tax evasion
- Abuse government contracts
- Launder illicit money
3. Enhance National and Global Security
This transparency aligns the U.S. with international standards for corporate ownership reporting set by the Financial Action Task Force (FATF).
4. Support Law Enforcement Investigations
FinCEN shares BOI data with:
- Federal and state agencies
- Foreign authorities (in certain cases)
- Financial institutions conducting due diligence
Why Your Business Must Comply
Even if you run a small LLC or corporation, you may be required to file. Noncompliance can result in:
- Civil fines of $500 per day
- Criminal penalties including jail time
Conclusion
So, what is the purpose of BOI filing? In short: to protect the financial system by lifting the veil of anonymity around company ownership. This helps prevent crime, boosts transparency, and aligns the U.S. with global best practices.
