Filing a Beneficial Ownership Information (BOI) report incorrectly can lead to several consequences, ranging from administrative burdens to legal penalties. It’s crucial to understand the implications and take corrective actions promptly if an error is identified. Here’s a detailed breakdown of what can happen and what steps you should take.

Consequences of Filing an Incorrect BOI Report

Have you filed an incorrect BOI report? Prepare for a bit of administrative burden. You will need to file corrections, which can be time-consuming and require additional resources.

FinCEN may impose civil penalties for failing to file a correct report or failing to correct an inaccurate report promptly. Penalties can be significant, depending on the severity and nature of the error. In cases of willful false reporting or deliberate omission of required information, criminal penalties, including fines and imprisonment, may apply.

What’s more, incorrect filings can damage the business’s reputation, especially if the errors suggest non-compliance or potential involvement in financial crimes. Repeated errors or significant inaccuracies can lead to increased scrutiny from FinCEN and other regulatory bodies, in addition to more negative attention from media and the public.

Steps to Correct an Incorrect BOI Report

1. Identify the Error
   Carefully review the previously submitted BOI report to identify the specific mistake. Understand whether the error affects just one part of the report or multiple sections.
2. Gather Correct Information
   Obtain the correct information for the beneficial owner(s) involved, including full legal names, dates of birth, addresses, and identifying numbers from government-issued IDs. Collect any necessary supporting documents to verify the correct information.
3. Prepare the Corrected Report
   Ensure that the corrected report includes all required details and that the information is accurate and complete. Use the designated FinCEN reporting method (online portal or paper forms) to prepare the corrected report.
4. Submit the Corrected Information
   File the corrected BOI report with FinCEN as soon as the error is identified and corrected, ideally within the specified timeframe (usually within 30 days). Obtain confirmation from FinCEN that the corrected report has been received and processed.
5. Maintain Records
   Retain copies of the original BOI report, the corrected report, and any correspondence or confirmation from FinCEN. Ensure that all related documentation is organized and easily accessible for future reference.
6. Review and Improve Internal Processes
   Review and enhance your internal compliance procedures to prevent similar errors in the future. Provide additional training to employees responsible for BOI reporting to ensure they understand the requirements and importance of accuracy. Implement more robust data verification processes and recordkeeping practices.

Tips for Avoiding Errors in BOI Reporting

• Conduct regular audits of beneficial ownership information to ensure accuracy and completeness.
• Establish clear internal processes for gathering and reporting beneficial ownership information.
• Utilize compliance management software to track changes in beneficial ownership and automate reporting processes.
• Regularly consult with legal and compliance experts to stay updated on regulatory changes and ensure adherence to requirements.
• Maintain detailed records of all beneficial owners and their information, updating them regularly to reflect any changes.

By taking these steps, businesses can minimize the risk of filing incorrect BOI reports and ensure compliance with the Corporate Transparency Act and FinCEN regulations. For additional help, Propel is here with an entire team of compliance specialists ready to help you file your BOI report and maintain ongoing compliance.