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 back with us.
And it is another surprise episode, surprise recording episode. We had them lined up so that Christmas and New Year's and we also do Hanukkah in our house. We do like every holiday.
I wanted it to be easy, but there have been so many changes with the Corporate Transparency Act, the business ownership information that I had to create some new episodes to be able to talk about that because it's actually a pretty big deal for your business. And I realized when saying it out loud that I'm having to change things because it's so exciting about the Corporate Transparency Act that it doesn't really get everybody's motor running, but it's major deals to the business. It's a pretty big issue with reporting requirements and what that could mean for you in fines and even criminal charges, two years in prison, big deal.
So we're going to jump into that today, talk about what changed, what that means for you and your business, what you do and don't need to do. And before we jump into that, please click that subscribe, click that like button, whether you're listening to us on Apple, Spotify, YouTube, wherever you're at, go ahead and follow us. We'd love to have the extra attention.
So getting into it now, I can easily say here, just listen to last week's episode and it's going to talk about the Corporate Transparency Act. You can actually go quite a few episodes back, a couple months now, good for us, and listen to a whole description of it. But if you're just joining us today, if you're just jumping on today, I'm going to go over exactly what the CTA is, what the BOI is, and we're not going to get really deep.
We've talked about it before, but here it is for all you newbies or for those of you that weren't really paying attention. Here it is again. So Corporate Transparency Act actually started January 1st, 2024.
It was signed in as part of the Anti-Money Laundering Act of 2020. So it's been percolating for a little bit, getting its footing. The whole purpose of it was to help with transparency around corporate ownership.
And that was to help fight money laundering, terrorism, and really so that the Financial Crimes Enforcement Network, FinCEN, under this BOI, Business Ownership Information Reporting requirements, would basically have a database of what everybody owned, essentially. That's really high level. But any entity that you had 25% or more ownership or control over, you had to report yourself as a beneficial owner.
So this way, if you had businesses, LLCs, trust, whatever, everything would come into this FinCEN database. And the idea is that it would allow FinCEN and other agencies that properly requested the data to be able to quickly see how money was moving to help fight all the money laundering through multiple different entities, which is definitely an issue in and of itself. Is the CTA and this going to help it? I don't know if we're going to really get into that all today.
But for the business ownership information, yeah, I got that right. For the reporting requirements, what you had to put in was names, date of birth, addresses, social security numbers, other identifying numbers like driver's licenses, passports. It was a tremendous amount of information that you had to put in for every entity that you had 25% or more ownership in.
You have any real estate, any investment properties, those are probably in their own LLC. That would be a separate BOI requirement, separate reporting requirement for each of those. It gets extensive.
And when you really get into the nitty gritty of it, if you change an address, if you move, if there's certain different things that you update, you have to update all of those reporting requirements. So if you've got multiple properties or multiple entities that you help manage, a simple address change could now mean that you have to redo reports on multiple, multiple entities. And if you don't, there's pretty serious fines.
Up to $10,000 in civil penalties and up to two years in prison. Two years in prison for not filling this out correctly. And I'm not going to get into it here about all of the exclusions for big business or for nonprofits or for those that support nonprofits because those are never used for money laundering.
The amount of extra work, the amount of compliance red tape, and just a minefield of problems for small businesses. The FinCEN BOI is huge. Even though they said that they were going to have an extensive communication program to let everybody know, tons of people still have no idea about it.
So, why are we having this episode? What's the deal with the CTA? What's the hold up with it? Well, if you got it through my tone that I think it's a little bit of an overreach, a lot of other people thought that as well. And the CTA has been in a pretty serious legal battle for quite a while now. And we're at a point right now where it's just, it's absolute ping ponging, just back and forth.
You do have to follow it. You don't have to follow it. You do.
You don't. So, the arguments of all of this is that it's a complete congressional overreach. Just talked about it.
It's way, way far having to require businesses to provide all of this information, which by the way, states already have all of it. It's already all there. You have to register a business when you create it, and you have to put yourself as an owner So, all the information's there.
This is just extra work. Another argument is that it compelled speech, that they claimed that it was forcing individuals to share data that violates their First Amendment right. I would need to read into a little bit more there.
I'm not a lawyer, but that's what it is. And also the privacy concerns, serious questions about whether collecting this level of detail constitutes an unreasonable search under the Fourth Amendment. And here's the biggest thing that I have an issue with, is this is just like going down to your local police and giving them a full inventory of everything in your house, your entire schedule, where you're going to be, what you're going to be doing, just in case you decide to break the law, they've got everything right there to make it easier for them.
They don't have to go searching for the data. It's all right in one spot for them. And that's kind of what this is here.
It was, I'm registering in the financial crimes database, just in case there's an issue. So a lot of issues there. Big, big court battles been going back and forth, and we reported on it.
We were excited. On December 3rd, 2024, so just a few weeks ago, District Court in Texas issued a preliminary injunction. It stopped FinCEN from being able to enforce the BOI requirements.
I should say that this is kind of the second injunction. The first one, FinCEN said, okay, well, we're going to go ahead and keep requiring everybody to do it, just not the people that were named in that suit. I don't know how that works.
In any case, December 23rd, the Fifth Circuit Court reversed that injunction. So December 3rd, it was stated, you don't have to follow it. We're going through a proceeding.
We're going to figure out what happens. December 23rd, because of all the appeals, they came back and said, no, actually, you do need to have everything in, which the deadline is January 1st, 2025, so that's a lot of time. But then, three days later, on December 26th, the Fifth Circuit panel reinstated the injunction.
So pop, back over, back over the net. Now the injunction is reinstated. So that's a lot of back and forth.
That's a tremendous amount of confusion. Especially with the deadline being right here at January 1st, which I should note that I believe it was, I should have the notes right in front of me, but I believe that FinCEN actually increased that two weeks to January 13th because of everything going on to give people time to put all the information in. But at any case, right now, businesses do not need to report the business ownership information.
Now we'll check that on FinCEN's website, FinCEN.gov slash BOI, because it is changing like crazy. And I don't even know if this is going to update before the podcast pushes out, because we're recording here, what day is this? This is Monday the 30th. We're recording this on Monday the 30th.
I just didn't have it in me to do it on the 26th. And it might change before it pops this Thursday. We'll see.
If so, we'll make an update. So I've got a lot of notes here on it. The bigger picture here is we've talked a lot about the CTA.
I don't want to create a whole run-on episode of just nonsense. But the big picture here is that the CTA was trying, or so they say, trying to create a situation to help with money laundering. But like with a lot of other privacy laws, a lot of other structure, it's just creating an absolute mess.
So we're trying to comply with these things. You don't know where to step. You don't know exactly what to do.
And a lot in the compliance side of things, a lot in the security structure side of things can be confusing and a lot of times contradictory. This one's just an absolute mess. So definitely keep watching it at FinCEN.gov, G-O-V slash B-O-Y, to get the most up-to-date information.
We'll definitely keep reporting on what's going on with the business ownership information because it's a big deal. It's a major compliance issue and it could land you in jail. And we're having to watch it for ourselves too.
So stay informed. Seek legal advice. If you have a legal team that you talk to or somebody that you find and talk to them, get their advice on it.
Input, output, cash in the cyber sheets does not give legal advice. So there's that disclaimer. And make sure you stay up on top of this because it is changing constantly.
So with that said, if you found this helpful, we will also be dropping a companion blog article that talks a little bit about this more, gives more of a timeline, dives a little bit more into the details. We will also keep up-to-date with all of the changes with it so that you know what's going on, you know what you have to do under the CTA EOI requirements. Thanks for tuning in, 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.
