The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has implemented a new law called the Beneficial Ownership Information Reporting Rule. This law requires many companies to report information about the individuals who truly control the business, known as “beneficial owners,” even if they’re not officially listed as owners.
These individuals hold 25% or more ownership or control, including hidden investors, trusts, or foreign powers. Reporting their identities helps prevent crimes like money laundering, corruption, and fraud.
It also provides transparency for everyone, leveling the playing field for legal businesses and protecting employees, customers, and other businesses from hidden risks. This law plays a crucial role in the government’s efforts to combat financial crime and ensure safe and ethical business practices.

A beneficial owner under FinCEN’s new Corporate Transparency Act is any individual who, directly or indirectly, exercises substantial control over a reporting company or owns or controls at least 25% of the ownership interests of the company. Here’s a breakdown:

1. Control:

• Substantial control: This is broadly defined and can include things like:
  • Appointing or selecting a majority of the board of directors or senior managing officials.
  • Controlling voting rights, even if not directly owning shares.
  • Having the ability to direct or significantly influence the company’s major decisions.

2. Ownership:

• 25% or more ownership interest: This includes direct ownership of shares, but also covers indirect ownership through things like:
  • • Trusts, where an individual has significant control over the trust that holds shares.
    • Nominee arrangements, where shares are held by another person on behalf of the beneficial owner.
    • Any contract, arrangement, or understanding that gives an individual control over the ownership interest.