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Data Strategy 6 min read Published Updated Credibility 88/100

Data Governance Briefing — January 1, 2025

FinCEN’s 1 January 2025 BOI reporting deadline requires legacy companies to file beneficial ownership reports while standing up governance, universal opt-out communications, and evidence controls spanning data collection, verification, and transmittal.

Zeph Tech Research Lead

Research lead, Zeph Tech

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Executive briefing: By 1 January 2025, reporting companies created or registered in the United States before 1 January 2024 must submit their initial beneficial ownership information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA) and its final BOI Reporting Rule (31 CFR 1010.380). The deadline follows the one-year filing window granted to existing entities, while companies formed during 2024 must file within 90 days of registration and entities formed on or after 1 January 2025 must file within 30 days. FinCEN has launched the Beneficial Ownership Secure System (BOSS) to receive filings, and failure to report can lead to civil penalties of $500 per day and criminal penalties up to $10,000 and two years’ imprisonment. Compliance requires boards and executives to align governance, universal opt-out communications, and evidence management across legal, finance, compliance, and technology functions.

The CTA aims to close anonymous shell company loopholes by requiring reporting companies—corporations, limited liability companies, and similar entities formed by filing with a secretary of state or tribal office—to disclose beneficial owners who exercise substantial control or own at least 25% of ownership interests. Exemptions cover 23 categories, including large operating companies with more than 20 full-time US employees, over $5 million in gross receipts, and an operating presence at a physical office, as well as banks, credit unions, SEC-reporting issuers, insurance companies, registered investment advisers, and public accounting firms. Boards must confirm whether subsidiaries or affiliates qualify for exemptions and document determinations.

Governance and operating model: Companies should establish a CTA governance programme led by the general counsel, chief compliance officer, or corporate secretary. A steering committee should include legal, treasury, tax, human resources, and information security teams, with periodic updates to the board or audit committee. Governance documentation should define processes for identifying reporting companies, classifying exemptions, gathering beneficial ownership data, and approving filings. Multinational groups need to coordinate across jurisdictions to reconcile CTA requirements with other beneficial ownership regimes, such as the EU’s 5th Anti-Money Laundering Directive (5AMLD), the UK’s People with Significant Control (PSC) register, and Canada’s federal and provincial transparency rules.

Policies and procedures should outline the scope of data to collect: beneficial owner name, date of birth, residential address, unique identifying number (passport, driver’s licence, or FinCEN identifier), and images of identification documents. Companies must also identify and report “company applicants” for entities formed after 1 January 2024—the individual who files the formation document and the person primarily responsible for directing the filing. Governance frameworks should assign responsibility for monitoring corporate changes (ownership transfers, board appointments, mergers) that trigger the 30-day update requirement.

Universal opt-out and communications: BOI compliance involves sensitive personal data of owners, directors, and senior officers. Organisations should align data collection communications with universal opt-out expectations across jurisdictions where beneficial owners reside. For instance, beneficial owners located in California, Colorado, Connecticut, or Virginia may use universal opt-out signals to restrict secondary uses of their personal data. Controllers should deploy secure portals that capture consent or legitimate interest justifications, explain statutory reporting obligations, and provide granular preference management for marketing or non-essential communications. Opt-out preferences must be respected across investor relations, marketing, and corporate communications to avoid conflating mandatory CTA reporting with discretionary outreach.

When collecting identification documents, organisations must implement secure upload channels with encryption in transit and at rest, multi-factor authentication, and data minimisation controls. Privacy notices should clearly state retention periods and deletion triggers aligned with CTA update obligations and other legal requirements. Companies should offer alternative submission methods for beneficial owners who cannot access digital platforms, ensuring opt-out choices for any optional data sharing (such as newsletters or investment opportunities) captured during the BOI process.

Evidence management and assurance: FinCEN expects companies to maintain records supporting the accuracy of BOI reports for five years after the reporting company ceases to exist. Evidence repositories should include copies of filed BOI reports, identification documents, beneficial ownership determinations, exemption analyses, board resolutions, and correspondence with beneficial owners. Metadata should capture filing dates, version history, responsible officers, and validation steps. Organisations should implement quality assurance checks prior to submission—verifying data consistency, confirming that identifying numbers match uploaded documents, and ensuring that addresses are current.

Internal audit or compliance testing teams should schedule reviews in 2024 to evaluate CTA readiness, sampling reporting companies to confirm governance adherence, opt-out management, and evidence completeness. For complex corporate structures, technology solutions such as entity management systems or governance, risk, and compliance (GRC) platforms can automate tracking of ownership hierarchies, beneficial owner certifications, and filing deadlines. Companies engaging external registered agents or corporate service providers must ensure contractual obligations cover CTA data handling, security, opt-out recognition, and audit support.

Operational execution: Legal and corporate secretarial teams should create a centralised entity inventory, flagging entities that fall within or outside CTA scope. They should collect beneficial ownership information through secure questionnaires, capturing attestations under penalty of perjury. Finance and tax teams can assist by leveraging existing Know Your Customer (KYC) and Anti-Money Laundering (AML) documentation. Technology teams must integrate BOI data pipelines with secure document storage, implementing role-based access controls and monitoring for unauthorised access.

Organisations should rehearse filing processes within the BOSS portal, ensuring single sign-on, user provisioning, and incident response coverage. If beneficial owners prefer to obtain a FinCEN identifier (FinCEN ID) to streamline reporting, companies must provide guidance and track assignment. Workflows should trigger updates when beneficial owners change addresses, transfer shares, resign from executive roles, or when corporate restructurings occur. Entities undergoing mergers or dissolutions near the deadline must coordinate to ensure filings are completed before corporate actions take effect.

Regulatory engagement and enforcement posture: FinCEN has issued compliance guides and FAQs clarifying expectations, and it is developing additional rulemakings on access and safeguards for the BOI database. Companies should monitor FinCEN updates, subscribe to alerts, and participate in industry associations (such as the American Bar Association, Association of Corporate Counsel, or Society for Corporate Governance) to stay informed. In the event of potential non-compliance, organisations should prepare escalation playbooks that involve notifying FinCEN, documenting remedial steps, and communicating with affected beneficial owners.

Action checklist for 2024: Conduct a CTA applicability assessment; update corporate governance policies; deploy secure data collection tools with universal opt-out management; build an evidence repository; train legal, compliance, and finance teams; run mock filings in the BOSS environment; and establish monitoring for changes that trigger update filings. Boards should request periodic dashboards detailing filing status, opt-out metrics, evidence readiness, and outstanding risks.

Sources

Zeph Tech centralises CTA governance by integrating universal opt-out-aware data intake, evidence vaults, and BOSS-ready workflows so legal and compliance teams can meet the 2025 BOI deadline with confidence.

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