New Reporting of Beneficial OwnersBy
Small private companies will now have to report their “beneficial owners” to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) because of a provision in the National Defense Authorization Act for Fiscal Year 2021, which lays out spending for U.S. Department of Defense programs.
A beneficial owner is defined as someone who owns at least 25% of a company or exercises substantial control; for those individuals, companies will need to report a range of personal information. The provision, inserted in the bill as a step to prevent money laundering, is aimed at shell or holding companies as well as smaller corporations or limited liability companies with limited operations. Companies with more than 20 employees or more than $5 million in gross receipts or sales, however, are exempt from the reporting requirements.