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Beneficial Ownership Information FinCEN

Friday December 29, 2023

There has been much discussion about the new Beneficial Ownership Information (BOI) reporting required by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and where CPAs fit into the process.

The BOI reporting requirement, mandated by the Corporate Transparency Act (CTA) of 2021, requires corporations, limited liability corporations, and other entities formed under state law or foreign law and registered to do business in the U.S. to report their actual ownership to FinCEN. The required reporting aims to deter money laundering, corruption, and other illicit activities—all things of interest to CPAs.

It appears that many companies are unprepared to meet the new requirements. The prevailing thought is that these companies will seek professional assistance when completing the reporting requirement. Should the service be provided by a lawyer or a CPA? The answer lies in the details that are not yet finalized.

There are discussions on whether completing the reporting would be considered the practice of law. That determination would need to be made by the Idaho State Bar, which oversees the practice of law in the State. The State Board of Accountancy cannot make that determination.

Then, there are the requirements that FinCEN is asking for as part of the reporting. A proposed certification includes the statement, “I certify that the information furnished is true, correct, and complete.”

While the reporting company will be required to make the certification, any individual who files the report as an agent of the reporting company will certify on the reporting company’s behalf.

It should be noted that FinCEN rejected suggestions to change the certification language by using terms such as “to the best of their knowledge” or “…after reasonable and diligent inquiry.”

The discussion was that this speaks to FinCEN’s desire to require an attestation of the accuracy or other certification of the requested reporting.

During the rulemaking process, FinCEN has recognized the existence of “applicable state laws and board of accountancy rules or regulations, which may be more exacting or stringent in some respects than Circular 230.”

There have been questions about the Board’s position on this matter. As previously noted, there are still questions about the required reporting.

What will the final certification look like? Would this be considered an attestation engagement (there are supporting document verification requirements) and thus subject to peer review? If the reporting company is on the hook for the reporting, why should the CPA be concerned when reporting on behalf of the company?

Until there is some finalization to this process, the Board is unable to offer any guidance or guardrails. But with all the uncertainty around the reporting, CPAs must be cautious and make informed decisions before engaging to perform such services.  The Board will continue to monitor the situation and provide any guidance as necessary as the reporting requirements are finalized.

Category: Accountancy;