FinCEN, the Financial Crimes Enforcement Network, plays a critical role in the fight against financial crimes such as money laundering and terrorist financing. Recently, new reporting guidelines have been introduced under the Corporate Transparency Act (CTA) to enhance transparency in corporate ownership and combat illicit financial activities.

We’ve broken down the major changes into the following Q&A, to help provide clarity on these updates and how they may impact Rhode Island small businesses. We turned to Kristen Cordeiro, Deputy Director of Business Services at the Rhode Island Department of State and our own director of the Greater Newport Region, Paul Harden, for insight.

What is FinCEN and what are the new reporting guidelines?

FinCEN is a federal agency that collects and analyzes information from businesses’ financial transactions to defend against financial crimes. The latest reporting guidelines were introduced through the CTA when it was passed by Congress in 2021. These guidelines mandate businesses to file a Beneficial Ownership Information (BOI) Report with FinCEN, to identify the individuals behind corporations.

How does this impact my small business in Rhode Island?

If your business was formed by filing a document with the RI Department of State or with another state in the US, you will likely need to complete this report. This includes Limited Liability Companies (LLCs), Corporations, Limited Partnerships (LPs), and Limited Liability Partnerships (LLPs).

While some exemptions exist in the CTA, they are related to heavily regulated entities, such as banks and large employers. You must report if you’re any type of corporation that makes more than $10,000 in a year. You will need to report who the directors and owners of your business are.

What are the reporting requirements and what paperwork will I need to file?

Businesses must submit a report containing specific information about their beneficial owners. This includes full legal names, dates of birth, current residential street addresses, and an accepted government-issued ID.

FinCEN Beneficial Ownership reporting can only be submitted directly on the FinCEN government website. There, you will also find additional FAQs, a Resource Guide for Small Businesses, and additional resources in multiple languages.

The due date for submitting your BOI Report will vary depending on when you formed your company.

• Businesses formed before January 1, 2024, have until December 31, 2024
• Businesses formed during 2024 have 90 days from the date of formation
• Businesses formed in 2025 and later will have 30 days from the date of formation

What will happen if I don’t file?

The CTA allows FinCEN to assess penalties against those who willfully violate the reporting requirement, including failing to report altogether. This can range from civil penalties of $500 a day until the report is filed, to criminal penalties of up to two years imprisonment and a fine of up to $10,000.

 

How much will filing cost me?

Filing is 100% FREE and should only take a few minutes of your time. Have a picture of your driver’s license, passport, or other qualifying identification ready.

Where can I get more information?

For more information, consult with your accountant, contact the Rhode Island Secretary of State’s office, and refer to guidance from the Department of Treasury. The RISBDC also has expert advisors, including several attorneys in our legal clinic, who may be able to provide more guidance.

Stay up-to-date on important reporting

Understanding and adhering to FinCEN reporting guidelines is essential for Rhode Island small businesses to avoid penalties and stay compliant. Filing is free of charge and only takes a few minutes to complete, so do so as soon as possible.

The Rhode Island Small Business Development Center at the University of Rhode Island employs a dedicated, experienced, and knowledgeable staff of business counselors and administrators who can assist you in growing your business. Register now for free, confidential business advice from our advisors here—call (401) 874-7232 to schedule a counseling appointment or attend our free webinars.