BOI filing for companies expanding internationally

Navigating FinCEN's BOI Reporting: What Foreign Companies Expanding in the U.S. Need to Know

The Financial Crimes Enforcement Network (FinCEN) has recently issued an Interim Final Rule (IFR) significantly altering the Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA). Effective March 26, 2025, these changes primarily impact foreign-formed entities operating in the United States. If your company is expanding internationally into the U.S., understanding these updates is crucial for compliance.

Key Changes to BOI Reporting:

Under the new IFR, most U.S.-formed companies are now exempt from BOI reporting. The focus has shifted to foreign-formed entities that are registered to do business in any U.S. State or Tribal jurisdiction. These "foreign reporting companies" remain subject to BOI filing obligations. Importantly, foreign reporting companies are also exempt from reporting BOI for U.S. persons.

New Deadlines for Foreign Reporting Companies:

• If your foreign reporting company was registered to do business in the U.S. before March 26, 2025, you must file your initial BOI report by April 25, 2025.
• If your foreign reporting company registers to do business in the U.S. on or after March 26, 2025, you must file your initial BOI report within 30 calendar days after receiving notice that your registration is effective.

What Information to Report:

Foreign reporting companies must submit their BOI reports electronically through FinCEN's secure BOI E-Filing System. The report requires:

• Company Information: Legal name, trade name (DBA) if applicable, current address, foreign jurisdiction of formation, U.S. state/tribal jurisdiction where registered, and IRS TIN/EIN or foreign tax ID with jurisdiction.
• Beneficial Owner Information: For each beneficial owner (individuals who own 25% or more, or exercise substantial control), you'll need their full legal name, date of birth, residential or business address, a unique ID number from an acceptable identification document (e.g., passport, driver's license), the issuing jurisdiction, and an image of the ID.
• Company Applicant Information: For foreign reporting companies, company applicant information may still be required if applicable.
• FinCEN Identifiers: These are optional but can streamline reporting for individuals who frequently provide BOI.

Penalties for Non-Compliance:

Willful violations of BOI reporting requirements can lead to severe penalties, including civil penalties of up to $500 per day (adjusted for inflation, currently around $591) and criminal penalties of up to $10,000 fine and/or two years imprisonment. Both individuals and entities can be held liable.

State-Level Considerations:

While FinCEN's federal rules are paramount, some states are developing their own beneficial ownership disclosure laws. For example, New York's LLC Transparency Act, effective January 1, 2026, will require state-level disclosures for LLCs. The District of Columbia also has existing disclosure rules. These state-level filings operate separately from FinCEN's requirements and may have different content rules, public access provisions, and timelines. Companies expanding into specific states should monitor and comply with both federal and state obligations.

Practical Compliance Checklist for Foreign Companies:

1. Determine Reporting Status: Confirm if your entity is a "foreign reporting company" under the updated IFR (foreign-formed and registered in a U.S. state).
2. Identify Beneficial Owners: Pinpoint individuals who own 25% or more or exercise substantial control.
3. Collect & Verify IDs: Gather required identity documents (name, DOB, address, ID number, issuing jurisdiction, and image of ID) for all beneficial owners.
4. Consider FinCEN Identifiers: Encourage beneficial owners to obtain FinCEN IDs for easier future reporting.
5. Plan Your Filing: Prepare to submit your BOI report via the FinCEN BOI E-Filing System by the applicable deadline.
6. Establish Internal Processes: Set up procedures to track changes in beneficial ownership, addresses, or other required information, ensuring updates are filed within 30 days.
7. Document Due Diligence: Maintain thorough records of your efforts to collect and verify BOI to mitigate enforcement risk.
8. Address Complex Structures: For foreign parent companies with U.S. subsidiaries, analyze whether the U.S. subsidiary is now exempt or if the foreign parent itself is a reporting company. For trusts or nominees, trace ownership to the ultimate natural persons.
9. Reconcile State & Federal Filings: If operating in states with their own BOI laws (like New York), ensure consistency while noting potential differences (e.g., residential vs. business addresses).
10. Seek Professional Counsel: For complex ownership structures or international data privacy concerns, consult legal and compliance experts.

Conclusion:

The recent FinCEN IFR has streamlined BOI reporting by exempting most U.S. domestic companies, but it places a clear and immediate burden on foreign-formed entities registered to do business in the U.S. Proactive compliance is essential to avoid significant penalties. Stay informed, establish robust internal processes, and seek expert guidance to navigate these evolving regulations.