As per a recent publication, The Financial Crimes Enforcement Network (“FinCEN”) has released a new Small Entity Compliance Guide (“Guide”) to aid compliance with the Beneficial Ownership Information Reporting Rule (“Reporting Rule”), a specific reference to the rule can be found in 31 CFR 1010.380. The Guide is primarily aimed at small business entities.
Under this new framework ,unless an enterprise can qualify for certain exceptions, the Reporting Rule applies to small businesses that employ fewer than 20 individuals in the United States and reported gross receipts and revenue of $5 million or fewer in the prior year. Essentially, this means a wider range of small business entities will now be obligated to report information about their owners and beneficial owners to FinCEN.
The new compliance guide can have noticeable implications on small businesses. It is time for legal professionals working in this domain to familiarize themselves with these new regulations. It would be wise for all small businesses and their legal advisors to understand the changing regulatory landscape and be prepared to comply with the new obligations under the Reporting Rules.
As always, maintaining regulatory compliance is critical for businesses of all scales. This new directive shines a spotlight on smaller entities – businesses that often may not have the dedicated resources to manage complex regulatory changes. Therefore, this mandates an increased level of vigilance and due diligence within the legal departments of these entities to avoid the possible repercussions of non-compliance.
As a part of the legal community tasked to oversee these shifts in compliance, it is vital to stay up-to-date and ensure that the businesses you represent are fully aware and adequately prepared for what lies ahead. Detailed engagement with the Guide provided by FinCEN would be a worthwhile first step in this endeavour.