Impact of FinCEN BOI Requirements on Commercial Property Owners

The reinstatement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements by the Financial Crimes Enforcement Network (FinCEN) introduces significant compliance obligations for commercial property owners. Understanding these requirements is essential to navigate the evolving regulatory landscape effectively.

Understanding the Corporate Transparency Act and BOI Requirements

Enacted to enhance corporate transparency and combat financial crimes, the CTA mandates that certain entities disclose their beneficial owners to FinCEN. A beneficial owner is an individual who directly or indirectly exercises substantial control over an entity or owns or controls at least 25% of its ownership interests. The required information includes the individual's full legal name, date of birth, current address, and a unique identifying number from an acceptable identification document.

Recent Legal Developments and Compliance Deadlines

The enforcement of the CTA has experienced legal challenges, leading to shifts in compliance deadlines. Initially, a federal district court in Texas issued an injunction blocking the enforcement of the CTA. However, this injunction was later stayed by the U.S. Supreme Court in January 2025, allowing FinCEN to proceed with enforcing the BOI reporting requirements. Consequently, FinCEN extended the reporting deadline to March 21, 2025, providing entities additional time to comply. (Wall Street Journal)

Implications for Commercial Property Owners

For commercial property owners, particularly those operating through legal entities such as corporations or limited liability companies, the reinstated BOI reporting requirements necessitate prompt action to ensure compliance. Failure to report accurate and timely beneficial ownership information can result in civil and criminal penalties, including fines and imprisonment.

Impact on Commercial Real Estate Transactions

The CTA's BOI requirements have a direct impact on commercial real estate transactions:

• Increased Due Diligence: Parties involved in commercial real estate deals must conduct thorough due diligence to verify the beneficial ownership of entities, ensuring compliance with BOI reporting obligations.
• Transparency in Ownership Structures: The CTA aims to prevent the use of anonymous shell companies in real estate transactions, promoting transparency and reducing the risk of illicit activities such as money laundering. (Reuters)
• Reporting Obligations: Entities involved in commercial real estate must assess whether they fall under the CTA's reporting requirements and, if so, prepare to disclose their beneficial ownership information to FinCEN by the specified deadline.

Recommendations for Compliance

To navigate the reinstated BOI requirements effectively, commercial property owners should consider the following steps:

• Assess Applicability: Determine whether your entity is subject to the CTA's reporting requirements based on its structure and operations.
• Identify Beneficial Owners: Compile accurate information on individuals who meet the criteria for beneficial ownership within your entity.
• Prepare for Reporting: Gather the necessary documentation and information to complete the BOI report accurately and submit it to FinCEN by the March 21, 2025 deadline.
• Consult Legal Counsel: Engage with legal professionals experienced in corporate compliance and real estate law to ensure adherence to the CTA and other relevant regulations.

By proactively addressing these requirements, commercial property owners can mitigate potential risks and maintain compliance within the evolving regulatory framework.