What Happens When a Beneficial Owner Has No “Acceptable” Government ID to Report to FinCEN?
Since January 1, 2024, small businesses (“reporting companies”) have been submitting information about their beneficial owners to the Financial Crimes Enforcement Network (“FinCEN”). The submission of such beneficial ownership information (“BOI”) is required under the federal Corporate Transparency Act (“CTA”)[1] and FinCEN’s regulations implementing the CTA.[2] The required BOI that must be filed with FinCEN by a reporting company includes each beneficial owner’s[3] full legal name, date of birth, residential street address, and a unique identifying number from, and an image of, an “acceptable identification document.”[4] The CTA defines an “acceptable identification document” to include a nonexpired U.S. passport; a nonexpired driver’s license issued by a state; some other nonexpired identification document issued by a state, local government, or Indian Tribe; and, for an individual who does not have one of those three documents, a nonexpired passport issued by a foreign government.[5] Guidance issued by FinCEN confirms that these are the “only acceptable forms of identification” that will meet the reporting requirement.[6]
So what happens if someone who qualifies as a “beneficial owner” of a “reporting company” whose BOI must be reported to FinCEN does not have one of the only four acceptable identification documents? This may not be all that uncommon. For example, imagine an elderly person who lives in a retirement home and doesn’t drive, doesn’t vote, doesn’t travel on airplanes, and doesn’t have a driver’s license or passport. Does that mean that they are not permitted to own shares in a company required to report its BOI to FinCEN, or if they do own shares in a reporting company that they must go to the trouble of obtaining an identification document that passes muster under the CTA?
Unfortunately, neither the CTA nor FinCEN’s implementing regulations nor any of the other guidance FinCEN has issued to date on BOI reporting seems to cover this eventuality. One of the Frequently Asked Questions identified by FinCEN indicates that FinCEN will accept a beneficial owner’s otherwise acceptable identification document without a photograph if the document does not include a photograph for religious reasons.[7] But FinCEN does not yet have an FAQ that deals with the situation where a beneficial owner simply does not have any of the acceptable identification documents. Until FinCEN does issue some guidance to cover this situation, it is unclear how a reporting company should deal with problem, especially if the reporting company is unable to file its required BOI electronically without submitting a unique identifying number from, and an image of, a nonexistent identification document.
[3] For a discussion of who qualifies as a “beneficial owner” of a reporting company, see eMinutes, “Updating Beneficial Ownership Information Previously Filed with FinCEN Will Require Vigilance” (Jan. 28, 2024).
[4] 31 U.S.C. § 5336(b)(2)(A).
[5] 31 U.S.C. § 5336(a)(1); see also 31 C.F.R. § 1010.380(b)(1)(ii) (FinCEN rule listing the same documents); FinCEN, Small Entity Compliance Guide Version 1.1, at 38 (Dec. 2023 ) (FinCEN checklist of documents that may be used to satisfy the reporting requirement).
[6] FinCEN, Beneficial Ownership Information Reporting Frequently Asked Questions, FAQ F.5, at 23 (updated Jan. 12, 2024) (emphasis added).
[7] See id., FAQ F.10, at 25.