Welcome to Cash in the Cyber Sheets. I'm your host, James Bowers, and together we'll work with business leaders and industry experts to dive into the misunderstood business of cybersecurity and compliance to learn how to start making money from being secure and compliant. Welcome to Cash in the Cyber Sheets.
Hey everybody, welcome to Cash in the Cyber Sheets. I'm your host, James Bowers, Chief Security and Compliance Architect here at Input Output. Very happy to have you here with us this holiday season, getting down to zero hour in this emergency episode. And I say that because we already had episodes planned so that we could enjoy a little time off.
But I wanted to bring this to you because of the reinstatement of the beneficial ownership information reporting requirements under the Corporate Transparency Act, the FinCEN BOI. And this just went into effect, which is very important because if you were planning on not reporting because of the injunction that went into effect December 3rd, that got reversed, meaning that you still have to comply, you still have to report. And if you don't, that could be fines, that could be civil criminal fines, and even some time in jail.
So very important. We're going to jump into it. Before we do, please click that like, click that subscribe, tell some people about us, post this on some of your favorite sites, bring some more people, and send us some comments for some things that you'd like to talk about.
So I also, before I jump into it, I want to apologize, I am very much fighting a cold. So if there is a lot of choppy edits, I apologize. I'm going to do the best I can.
But this is very, very important. I wanted to get this out. And here we go.
We're jumping in. So if you have heard nothing about it before, let's just dive in a little bit to what exactly the BOI, Beneficial Ownership Information Reporting Requirements, what they are, what it is, kind of the background to it. Now, the beneficial ownership information that mandates that certain businesses disclose details about the individuals who directly or indirectly control those entities.
Long story short, if you own over 25% or have over a 25% controlling interest in an entity, then you have to report your information under the beneficial ownership information requirements. Now, the reason that these are in place, according to the government, according to financial crimes, FinCEN, is that it's critical to fight financial crimes, to help fight against money laundering, terrorism financing, tax evasion. And the idea is that everybody will put all of their information into FinCEN, the financial crimes network, financial crimes database.
What could go wrong there? That should be fine. Everybody puts all of their information in there. And then that way, FinCEN can quickly see who has access to what and start putting the pieces together of irregularities like money laundering or other things that just aren't legal.
What they're hoping for is that it's going to increase transparency and help prevent the misuse of anonymous entities being used for illicit activities, basically trying to prevent people from creating all these different shell companies and such and running money through them or using them to commit crimes. That's the idea. I don't know if I'm going to get into the discussion on that here, mostly because of how I'm feeling, but we'll see.
But that's the background of it. Now, a little historical context, CTA, it was enacted as part of the National Defense Authorization Act during 2021. It actually became law on January 1st, 2021.
I probably should have read that bullet point. That's that's not blowing my skirt up. In any case, it does represent a massive shift in corporate transparency and reporting.
Before, where the states and banking institutions, financial institutions had all of this information, now everybody's giving it directly to FinCEN. And they already had access to it, but whatever. All right, their Bureau of the US Treasury, blah, blah, blah, they don't really need that.
They're tasked with establishing and maintaining a secure database because government databases never get compromised. So don't worry about putting all of your information in there. It's not going to be a problem.
I think you can think you can feel where where I sit on this issue. All right. We gave a little bit of background.
Let's get into some of the timeline of events. So we already talked about January 1st, 2021. That's when Corporate Transparency Act was actually enacted that fiscal year.
January 1st, 2024 is when FinCEN actually started collecting or accepting the beneficial ownership information, the BOI reports from companies. Entities graded or registered after this were required to file reports by January 1st, 2025, and that's what's changing. That's what we're going to talk about now.
Here's where things start getting really kind of sketchy or crazy. So on December 3rd, 2024, weeks ago, just weeks ago, a federal district court in Eastern District of Texas issued a nationwide injunction. They said that the CTA's BOI, there's a lot of acronyms.
They said that the BOI reporting requirements were creating constitutional concerns and they put a halt to it, an injunction. People didn't have to report. And even if you went to the FinCEN website, it even said you don't have to report.
Everything's paused. And that was awesome. We actually did a podcast on it.
We were excited. Now, December 5th, the Department of Justice filed an appeal. In December 23rd, what is that? Yesterday, U.S. Court of Appeals for the Fifth Circuit lifted the nationwide injunction.
So now that means if you thought you didn't have to report, you do have to report because the BOI is back in force. You have to report. So that's a major issue.
A lot of people were holding off and with the news on December 3rd, we're very excited because now they didn't have to put all their information in. But that's not the case. Now you actually have to.
So let's get into the actual compliance requirements. Under the BOI, when you go to, what do I have it on here? It's actually at FinCEN.gov slash BOI. When you go there, you're going to need to provide the full legal name of each of the individuals with 25 percent more ownership or controlling interest in an entity, a reportable entity.
We're not going to get into all the exclusions, but you can actually get those right on the FinCEN website. They do have a pretty good resource that goes through all of the information about who does need to report, who doesn't need to report. In any case, for those of us that do need to report full legal name, you need to provide your date of birth, your residential address, and a unique identifying number like a driver's license, a passport.
You need to provide this information. So what you're going to do is go to FinCEN.gov slash BOI, determine your reporting obligation. Unless you're a pretty much a licensed financial institution, a nonprofit, strictly supporting a nonprofit or a major entity, I'm really paraphrasing there, you're pretty much going to have to report.
Get all of your information, access the reporting system, FinCEN.gov slash BOI, complete the BOI report. It's actually not difficult to complete. It's pretty straightforward.
It's just a lot of information. Submit it and retain that confirmation for your records. Now, here's the thing.
A lot of people were waiting because they didn't want to put their information in. I was in that boat. However, as we come to the deadline, over 30 million businesses need to report into this one area.
That system is going to crash like crazy. So waiting until the very last minute probably is not the best idea. Right now, the deadlines, any entities formed before January 1st, the initial reporting requirements were that you had to have your information in by January 1st, 2025.
In light of everything, and this is actually on the FinCEN website, the deadline has been moved to January 13th, 2025. So basically getting an extra two weeks there to do the reporting. Any entities formed on or after January 1st, 2024 have to file within 90 days.
Now, I would go to their website because that has become a hodgepodge mess, but I believe that entities after September get until January 13th, those in December get an extra 21 days. In any case, you have pretty much until January 13th, 2025. Now, for any entities that are formed January 1st, 2025 and later, those are going to have 30 days to report.
So you need to make sure to get that in. And why is it so important? Why did we have to create a podcast when I can barely talk just to talk about this? So daily fines, if you are noncompliant, if you do not file correctly, that can be $591 per day for each of the violations. So if you have multiple entities and multiple individuals that can rack up pretty quick, you can also get civil penalties.
That could be up to $10,000 and up to two years in prison. It's just serious stuff. It is why we were so against it because there are a lot of, I feel like it's a minefield of regulations and reporting and any changes that you do.
If you change an address, now you need to go and update the BOI and it introduces so much complexity and it's like just ticking time bombs all over, all around all of your businesses. And well, I said, I'm not going to get into how I feel about how it is or isn't going to help. That's not the point of today's episode.
Well, we'll get into another one of those. Actually, I think we probably have like two or three, but the point is, is you do need to make sure that you report because Vinson BOI is back in effect. And essentially you have up until January 13th, 2025 to get your BOI reporting requirements satisfied.
If you were waiting for any other injunctions, if you were waiting to see what happens, I'm not going to give an opinion there. I don't know if I would recommend that because I would not recommend putting yourself or your business in a position to be noncompliant, which could result in civil and criminal fines and even up to two years in prison. Not exactly sure what would trigger that enforcement, but make sure that you're following your requirements.
Again, go to that website, Vinson.gov slash BOI. All of the information is right there. You're also welcome to reach out to us for any questions.
Your CPAs and attorneys can also be a lot of help, although they're probably not going to report for you because of all the liability. They don't want to be going to jail for two years for you. They've got to do it themselves.
So very sad news. I'm not super excited about it. I thought we were going into Christmas break here and just got to relax. But in any case, anything crazy that comes back out, we will jump right back on. We will provide the information. Thank you for listening to us today.
Please click that subscribe, click that like, and have a very Merry Christmas, very happy Hanukkah, very happy holidays, wherever you celebrate and stay safe. Until next time.
Thanks for joining us today. Don't forget, click that subscribe button, leave us a review, and share it with your network. Remember, security and compliance aren't just about avoiding risk. They're about unlocking your business's full potential. So stay secure, stay compliant, and we'll catch you next week on Cash in the Cyber Sheets. Goodbye for now.
