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What Is FinCEN?

By FileForms | July 24, 2023

At your business, you likely have many responsibilities that demand your time and attention. Keeping up with changing regulations and requirements can be challenging. One acronym on the horizon is FinCEN, which stands for Financial Crimes Enforcement Network.

FinCEN is a bureau under the U.S. Department of the Treasury that gathers and scrutinizes financial transactions to prevent and fight financial crimes like money laundering and terrorism financing. Beginning in 2024, FinCEN will require many businesses to report Beneficial Ownership Information, more often referred to as a BOI report.

Understanding these new regulations can help ensure your business remains compliant and you avoid potential penalties. Here is a brief overview of what FinCEN is, what BOI reporting is about, and how you can get help with filing to keep your business compliant.

What does FinCEN Do?

FinCEN is tasked with safeguarding the financial system and keeping the integrity of our economy intact and safe. Their job includes:

Receiving and Maintaining Transaction Reports

FinCEN’s primary duty is to collect financial transaction reports from banks and other financial institutions. This includes:

  • Reports of cash transactions over $10,000
  • Suspicious activity reports
  • Foreign money transfer reports
  • Reports of certain cross-border electronic transmittals of funds

FinCEN receives over 2 million reports each year and maintains this data to assist law enforcement investigations.

Analyzing Financial Transactions

FinCEN analyzes the transaction reports it receives to identify patterns, trends, and anomalies that could indicate money laundering, tax evasion, terrorist financing or other illicit financial activities.

FinCEN experts review transaction histories, network analyses, and other tools to uncover potential financial crimes that would otherwise go undetected.

Sharing Financial Intelligence

When FinCEN identifies suspicious patterns of activity, it shares that financial intelligence with relevant law enforcement and regulatory agencies.

This includes the FBI, IRS, Secret Service, ICE, and numerous state and local entities. FinCEN operates a secure network to facilitate real-time information sharing.

Issuing Regulations and Guidance

FinCEN issues regulations requiring financial institutions to file transaction reports, implement anti-money laundering programs and comply with other rules.

FinCEN also provides guidance to financial institutions on identifying and reporting potential terrorism financing, weapons proliferation financing, and other threats.

Managing Financial Sanctions

FinCEN manages various financial sanctions programs imposed by the U.S. Treasury Department. This includes:

  • Blocking assets of sanctioned individuals and entities
  • Investigating possible sanctions violations
  • Designating new individuals and entities for sanctions based on threats

Working with International Counterparts

FinCEN collaborates and exchanges information with counterparts in over 100 countries. This includes members of the Egmont Group, a global network of financial intelligence units.

International cooperation is key to tackling financial crimes that span borders.

FinCEN’s Mission

FinCEN fulfills its mission through these activities: to safeguard the U.S. financial system from abuse and combat money laundering, terrorist financing, and other illicit financial activity.

FinCEN accomplishes this by leveraging the data, insights, and authorities at its disposal to support law enforcement and protect national security.

With a “follow the money” approach, FinCEN aims to uncover and disrupt financial networks that support criminal and terrorist activities. With the right financial intelligence, authorities can bring those responsible to justice.

By gathering, analyzing, and sharing financial activity reports through its regulatory and collaborative roles, FinCEN seeks to make the U.S. financial system impervious to abuse while facilitating legitimate transactions.

What Is the Beneficial Ownership Report or BOI Reporting?

Millions of small businesses will be required to submit a Beneficial Ownership Information (BOI) Report to the Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury beginning on January 1, 2024.

Regulations issued by FinCEN specify who must file a report, when that report must be made, and what information must be reported in accordance with the requirements set forth by Congress in a bill known as the Corporate Transparency Act (CTA).

There are significant penalties for failing to comply with this new reporting requirement, therefore, it’s important that every business owner be aware of it.

What Is the Corporate Transparency Act About?

The primary function of the CTA is to combat money laundering. In it, lawmakers claim that criminals in the United States try to hide the true identities of the people who own corporations, limited liability companies, and other business structures in order to commit crimes like money laundering, terrorism financing, and tax evasion.

In order to safeguard national interests and facilitate efforts to resist these criminal activities, Congress has determined that federal legislation allowing for the collecting of beneficial ownership information is required.

Who Can Be Considered a Beneficial Owner?

Beneficial owners are not limited to shareholders of a company’s stock. Instead, it encompasses anyone with significant economic ties to the firm, such as 25%+ ownership (direct or indirect) or voting rights. Corporate officials and directors, LLC management, partners, and similar individuals may be considered “beneficial owners.”

Need Help With BOI Reporting and Getting Compliant with FinCEN?

Gaining compliance with FinCEN doesn’t have to be a hassle when you can get help with BOI reporting with FileForms. We have made filing BOI reports and other paperwork easier on our technological platform, saving you time and effort.

Our goal in developing FileForms was to cut costs and increase efficiency for businesses and their advisors.  The typical filing time on our platform is under 10 minutes, and it features a “central source of truth,” sophisticated process automation, and a streamlined workflow.

We save you time and money by storing user profiles for future filing needs and using automated technologies to populate entity and owner information. Let us help simplify the process of collecting and organizing evidence of entity ownership. FileForms can save you time and headaches. Find out more today.