Investors need to file a Beneficial Ownership statement — Many domain
Fresh requirement kicks in this year for firms to file ownership statements.
U.S. domain name investors who operate their business as a limited liability firm or corporation have a fresh filing requirement this year.
Nearly all businesses (other than sole proprietorships not filed with a Secretary of State) must file a Beneficial Ownership statement with the U.S. Financial Crimes Enforcement Network. Businesses created ahead of this year must file the statement by January 1, 2025. (Newly-organized businesses have a requirement to file sooner.)
The statement identifies beneficial owners of a firm as those that meet one of two qualifications:
- Controls at least 25% of the ownership interests of the firm OR
- Exercises “substantial control” of the firm
“Substantial control” is broadly defined. It includes senior officers and “notable decision-makers.”
As part of the process, each beneficial owner will need to provide a copy of an official document such as a passport or state driver’s license.
Since some people are a beneficial owner of many firms, individuals can also apply for a FinCEN ID. This captures their information and allows them to provide the ID to firms that are submitting the notes, rather than provide the same personal information to each entity for submission.
There might be an advantage to holding off on submitting your note. There are legal challenges to this fresh requirement, and it’s possible a delay or overhaul will take place ahead of the deadline. But you ought to pencil in to check on this ahead of the deadline; penalties for non-compliance can be up to $10,000 and two years in prison.
