The Financial Crimes Enforcement Network (FinCEN) requires that all companies meeting the following requirements must report their Beneficial Ownership Information:

1. 20 or fewer employees -or-
2. Less than $5M in gross receipts or sales (as reflected in previous year’s tax returns) -or-
3. Is a foreign-owned pooled investment vehicle -or-
4. Are not otherwise exempt

There are, however, 23 exemptions to this rule. If your company falls into any of the following categories, they are not required to report their Beneficial Ownership Information to FinCEN. The reason for providing exemptions to reporting beneficial ownership information might be due to privacy concerns, national security interests, or specific legal considerations. Normally, exemptions of this kind are designed to balance the need for transparency (to combat criminal activity such as money laundering) with the need to protect sensitive information or legitimate business interests.

1. Securities reporting issuer

• (A) An issuer of a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l); or
• (B) Required to file supplementary and periodic information under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)).

2. Governmental authority

Any entity that:

• (A) Is established under the laws of the United States, an Indian tribe, a State, or a political subdivision of a State, or under an interstate compact between two or more States; and
• (B) Exercises governmental authority on behalf of the United States or any such Indian tribe, State, or political subdivision.

3. Bank

Any bank, as defined in:

• (A) Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
• (B) Section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)); or
• (C) Section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)).

4. Credit union

Any Federal credit union or State credit union, as those terms are defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).

5. Depository institution holding company

Any bank holding company as defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841), or any savings and loan holding company as defined in section 10(a) of the Home Owners' Loan Act (12 U.S.C. 1467a(a)).

6. Money services business

Any money transmitting business registered with FinCEN under 31 U.S.C. 5330, and any money services business registered with FinCEN under 31 CFR 1022.380.

7. Broker or dealer in securities

Any broker or dealer, as those terms are defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), that is registered under section 15 of that Act (15 U.S.C. 78o).

8. Securities exchange or clearing agency

Any exchange or clearing agency, as those terms are defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), that is registered under sections 6 or 17A of that Act (15 U.S.C. 78f, 78q-1).

9. Other Exchange Act registered entity

Any other entity not described in securities reporting issuer (Exemption #1), broker or dealer in securities (Exemption #7), or securities exchange or clearing agency (Exemption #8) of this section that is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934. (15 U.S.C. 78a et seq.).

10. Investment company or investment adviser

Any entity that is:

• (A) An investment company as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3), or is an investment adviser as defined in section 202 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2); and
• (B) Registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.).

11. Venture capital fund adviser

Any investment adviser that:

• (A) Is described in section 203(l) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(l)); and
• (B) Has filed Item 10, Schedule A, and Schedule B of Part 1A of Form ADV, or any successor thereto, with the Securities and Exchange Commission.

12. Insurance company

Any insurance company as defined in section 2 of the Investment Company Act of 1940 (15 U.S.C. 80a-2).

13. State-licensed insurance producer

Any entity that:

• (A) Is an insurance producer that is authorized by a State and subject to supervision by the insurance commissioner or a similar official or agency of a State; and
• (B) Has an operating presence at a physical office within the United States.

14. Commodity Exchange Act registered entity

Any entity that:

• (A) Is a registered entity as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a); or
• (B) Is:
• (1) A futures commission merchant, introducing broker, swap dealer, major swap participant, commodity pool operator, or commodity trading advisor, each as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a), or a retail foreign exchange dealer as described in section 2(c)(2)(B) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(B); and
• (2) Registered with the Commodity Futures Trading Commission under the Commodity Exchange Act.

15. Accounting firm

Any public accounting firm registered in accordance with section 102 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7212).

16. Public utility

Any entity that is a regulated public utility as defined in 26 U.S.C. 7701(a)(33)(A) that provides telecommunications services, electrical power, natural gas, or water and sewer services within the United States.

17. Financial market utility

Any financial market utility designated by the Financial Stability Oversight Council under section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010 (12 U.S.C. 5463).

18. Pooled investment vehicle

Any pooled investment vehicle that is operated or advised by a person described in the following exemption from this list: banks (exemption #3), credit unions (exemption #4), broker or dealer in securities (exemption #7), investment companies or investment advisors (exemption #10) or venture capital fund advisors (exemption #11).

19. Tax-exempt entity

Any entity that is:

• (A) An organization that is described in section 501(c) of the Internal Revenue Code of 1986 (Code) (determined without regard to section 508(a) of the Code) and exempt from tax under section 501(a) of the Code, except that in the case of any such organization that ceases to be described in section 501(c) and exempt from tax under section 501(a), such organization shall be considered to continue to be tax-exempt for the 180-day period beginning on the date of the loss of such tax-exempt status;
• (B) A political organization, as defined in section 527(e)(1) of the Code, that is exempt from tax under section 527(a) of the Code; or
• (C) A trust described in paragraph (1) or (2) of section 4947(a) of the Code.

20. Entity assisting a tax-exempt entity

Any entity that:

• (A) Operates exclusively to provide financial assistance to, or hold governance rights over, any entity described in tax-exempt entity (exemption #19)
• (B) Is a United States person;
• (C) Is beneficially owned or controlled exclusively by one or more United States persons that are United States citizens or lawfully admitted for permanent residence; and
• (D) Derives at least a majority of its funding or revenue from one or more United States persons that are United States citizens or lawfully admitted for permanent residence.

21. Large operating company

Any entity that:

• (A) Employs more than 20 full time employees in the United States, with “full time employee in the United States” having the meaning provided in 26 CFR 54.4980H-1(a) and 54.4980H-3, except that the term “United States” as used in 26 CFR 54.4980H-1(a) and 54.4980H-3 has the meaning provided in § 1010.100(hhh);
• (B) Has an operating presence at a physical office within the United States; and
• (C) Filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5,000,000 in gross receipts or sales, as reported as gross receipts or sales (net of returns and allowances) on the entity's IRS Form 1120, consolidated IRS Form 1120, IRS Form 1120-S, IRS Form 1065, or other applicable IRS form, excluding gross receipts or sales from sources outside the United States, as determined under Federal income tax principles. For an entity that is part of an affiliated group of corporations within the meaning of 26 U.S.C. 1504 that filed a consolidated return, the applicable amount shall be the amount reported on the consolidated return for such group.

22. Subsidiary of certain exempt entities

Any entity whose ownership interests are controlled or wholly owned, directly or indirectly, by one or more entities described in exemptions #1, #2, #3, #4, #5, #7, #8, #9, #10, #11, #12, #13, #14, #15, #16, #17, #19, or #21

23. Inactive entity

Any entity that:

• (A) Was in existence on or before January 1, 2020;
• (B) Is not engaged in active business;
• (C) Is not owned by a foreign person, whether directly or indirectly, wholly or partially;
• (D) Has not experienced any change in ownership in the preceding twelve month period;
• (E) Has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding twelve month period; and
• (F) Does not otherwise hold any kind or type of assets, whether in the United States or abroad, including any ownership interest in any corporation, limited liability company, or other similar entity.

 

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