Welcome to Ask an Expert Business Series with Misty Lambrecht, the owner of Webfoot Marketing and Design, sharing valuable insights based on her extensive 15 years of experience in business startups and advising in Lincoln County.I am personally not super excited about another step in the business paperwork drama, however the fines that might be attached to this could be very costly.
Reinventing Rural will be holding some events in January helping businesses walk through this filing. Look for events on their website. This is the general information as we know it now. Starting in January, the United States is set to implement new federal filing requirements that will affect a wide range of businesses. These requirements target what is known as ";shell businesses" and aim to achieve greater transparency, accountability, and fairness in the business landscape.
Defining Shell Businesses
A "shell business" refers to a company that exists primarily on paper, with little to no genuine
business activity, assets, or employees. Shell businesses are often established for purposes
other than legitimate business operations, such as money laundering, tax evasion, or fraudulent activities. They can be used as vehicles to move funds illicitly, making it challenging for authorities to trace the origin of money.
New Filing Requirements
Starting in January, the United States will require businesses to disclose beneficial ownership
information. This means that businesses must identify and report the individuals who own and
control the company. The goal is to increase transparency and curb the misuse of shell
businesses for illicit purposes. Key provisions of the new requirements include:
Ownership Disclosure: Businesses will need to provide information on individuals who
have a substantial ownership interest (typically 25% or more) in the company.
Filing with FinCEN: These disclosures will be submitted to the Financial Crimes
Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
Maintenance of Records: Companies must maintain records of beneficial ownership
information, which will be available to law enforcement and other authorized entities.
Aims and Objectives. The new requirements are driven by several important goals:
● Enhanced Transparency: By disclosing beneficial ownership, authorities can more
effectively track the flow of money and prevent the misuse of shell businesses for illegal
● Deterrence of Illicit Activity: These requirements aim to deter criminals from using shell
businesses to conceal their identities and engage in activities like money laundering, tax
evasion, and fraud.
● Improved National Security: Ensuring greater transparency in business ownership helps
protect national security by preventing illicit actors from hiding behind anonymous
Potential Fines for Non-Compliance
To enforce the new requirements, there will be penalties for businesses that fail to comply.
While the specific fines can vary, depending on the nature and severity of the violation, they can be substantial. Non-compliance may result in:
● Civil fines of up to $500 for each day the violation continues.
● Criminal penalties, including imprisonment for up to 2 years or fines up to $10,000.
The introduction of new federal filing requirements for US businesses represents a significant
step towards increasing transparency and combating the misuse of shell businesses for illegal
purposes. By identifying and disclosing beneficial ownership information, the authorities hope to create a more accountable and secure business environment. It's essential for businesses to understand these requirements, comply with them, and maintain accurate records to avoid potential fines and legal repercussions. In doing so, they contribute to the broader goals of strengthening national security and protecting the integrity of the US business landscape.