Bank Account Compliance Webinar Series: FBAR & BOI

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Research - Market Data
Inform - Industry Insights

Dates / Times

Tuesday, June 27, 2023
11:00 AM – 11:30 AM EDT

Wednesday, June 28, 2023
2:00 PM – 2:30 PM EDT


This is an online event


Jason Campbell, Strategic Treasurer
Craig Jeffery, Strategic Treasurer

Hosted By

Strategic Treasurer Logo


While FBAR reporting requirements for corporations and FBAR signers (including portal users who can enter or approve a wire transfer) have been around for many years, the level of understanding still varies significantly. This session will start off with a brief refresh of the FBAR requirements. The majority of the webinar time will be allocated to studying beneficial ownership information (BOI) and new requirements that begin January 1, 2024 for companies that meet specific requirements. This is the first in a series that will explore BOI requirements and how to solve for this regulation.


Announcer  01:07

Welcome, everyone to today’s webinar on FBAR and BOI the first in a series of webinars on bank account compliance. This is Brian from Strategic Treasurer. And we’re pleased you could join us as we compare and contrast report of foreign bank and financial accounts, that is FBAR, and beneficial ownership information, that is BOI, as well as considering BOI reporting requirements, and how to navigate this new regulation. But before I introduce today’s speakers, I have just a few quick announcements. Zoom offers several different ways for us to interact today. If you would like to post comments or questions viewable by all attendees, please use the chat icon in the toolbar. If you’d like to ask your question to just the presenters, please use the q&a icon in the toolbar. You can ask your questions at any time during the presentation. And we’ll try to get to as many as we can. But if we don’t get to your question, someone from our team will gladly follow up with you. There will also be a few polling questions throughout today’s webinar, where you’ll be able to select your response from a list of multiple choices, you will need to click the submit button on the polling questions to have your response recorded. And last, please ensure that your resume display name includes both your first and last name. So we’ll know to whom we should send the credits. Our speakers for today are Jason Campbell, business development leader at Strategic Treasurer. And Craig Jeffery, Founder and Managing Partner of Strategic Treasurer. Welcome Jason and Craig. And I’ll now turn the presentation over to you.


Jason Campbell  02:51

Thanks, Brian. appreciate it as always, and welcome, everybody. And we’re so happy to have everybody join us on this wonderful Tuesday. I hope your week has started off absolutely fantastic. And Craig and I are excited to have the discussion today around FBAR and BOI or BOI , or however you want to, you know kind of announce their pronounced that acronym. I know that we always love our acronyms and our worlds. So but today’s topics of discussion as we go through and kind of the information that you’ll have over this next 30 minutes with us, we’re going to kind of go back and talk about the history and some distinctives of around FBAR and BOI talk a little bit more about you know, boi being this new regulatory event that’s going to be occurring, that it’s going to have some impact and how things that we can ensure that we’re all in compliance on, you know, who does it apply to, and what needs to be filed, then we’re gonna go through and talk about the filing deadlines, as this is new. So we want to make sure that we have it on our radar, we put things on our calendar, we prepare, and we’re ready for to submit whatever information is being required if your organization if it does qualify. So we’re gonna talk about about those deadlines. And then as well as going into finalizing how to move forward through some practical implications there. So before we get into a little bit more in depth on each of these particular subjects, Craig, if we go to the next slide, we’re going to talk about the context of boi and really kind of how do we get to this point, right. So what is, you know, how did how did BOI really come be a part of what we need to be worried about or concerned about? Or how to prepare for it? You know, how did this come to this point and where we’re at in this intersection of this regulation. So with the anti Money Laundering Act of 2020, that came into place for another acronym AML. As some of you may know, it, as you know, really mandated that financial institutions must establish risk based programs with reasonable designs to combat money laundering and terrorism financing. So it’s a way to really kind of find out, you know, and try to capture those criminal activities. And additionally, these institutions were obligated to comply with some record keeping mandates that they ultimately ensure that they were in Been able to pinpoint where the transactions and things were happening. And then to kind of put it a little more narrow focus as part of this Act, Congress introduced the corporate Transparency Act of 2021. To reinforce its efforts and discouraging criminals, from infiltrating the US financial system with their unlawfully acquired funds. The Act mandates that specific companies to disclose details about their beneficial owners and company applicants to FinCEN under the Department of Treasury, this information can assist the Government in effectively preventing such illicit activities and hopefully capturing more of the criminals. Which leads us to the final rule of beneficial ownership that was put into place on September 30, of 2022. And so with this final rule from the US Department of Treasury, it’s implementing the beneficial ownership reporting requirements of the corporate Transparency Act that we just discussed. The final rule requires certain entities organized or registered to conduct business in the United States to disclose identifying and beneficial ownership information, otherwise known as BOI, to the US federal government. So that kind of puts it into perspective. You know, why are we here talking about this? You know, what, you know, how did we get to this point? And, you know, how do we handle the situations? Or how do we make sure that we’re in compliance with this regulation moving forward, which is going to lead us into our first polling question. So when we think about filing for BOI, we got it to a single option here, you have a filing for BOI will be in the Vincenz, as we already talked about, but which system will BOI actually be filed within? So you want to go ahead and submit your your response there. And then also to for us to know, we always like to provide, you know, the answers to the polling questions and the answers to our audience to have on hand, as you’ve answered this polling question, it would be fantastic to see 65 responses in the chat, you guys can put in the word poll and chat, and we will release the information of the polling question.


Craig Jeffery  07:08

Just give everybody what do I also work if they type in boi with that count?


Jason Campbell  07:12

Yeah, if they type in BOI and chat, we will take that we can get 65 participants on this call today, the type and pull or BOI, that will be an acceptable response for us to make sure that we share these polling questions and responses. Even me great if somebody put Yeah, BOI, and it’d be fun to. Right. All right. Go ahead. Great.


Craig Jeffery  07:42

Well, this is interesting. So this was a this was a trick question. There’s only two systems that actually exist beneficial ownership, secure system or boss. Right. BSA e filing is what is used for FBAR. The beneficial ownership secure system that 22% identify is the correct one, that’s where BOI will be filed. The beneficial owner, ship reporting system or bores is made up so as beneficial ownership tracking system with bots. So obviously, the bots LinkedIn full to many people, but just some interesting information to bring a little bit of light to that. So thank you for, for responding. So it’s the boss system, which we’ll look at. And Thanks for Thanks for joining. I’ll add that to what Brian said and what Jason said for joining us on this. I know that compliance bank account management know your customer, FBAR, and BOI, these are, these are probably not a few of your favorite things. But let’s let’s do a quick contrast between FBAR and BOI, because they are filed, they are filed or will be filed through FinCEN part of the Department of Treasury. So they’re both they’re both similar in that there’s an element of financial transparency and accountability for foreign bank account reporting as well as for who has ownership interest in various companies. So it all stems from some of the same type of concepts, slightly different legal structure as Jason went through the AML and then some of the subsequent rules so FBAR use the BSA e filing system. So that was the fourth choice. Boi requires beneficial ownership secure system, which is being created and is expected to be up and ready to file on January 1 2024. I think on New Year’s Day. So between FBAR and BOI, what are the differences? FBAR focuses on foreign bank accounts. So a lot of people use the FBAR for foreign bank account reporting. There’s a larger name for that, but it’s you know, if you have over a certain amount of money in foreign bank accounts, those require reporting And that’s heavily focused on tax evasion and grew in emphasis for in the last 10 years due to terrorist financing to make sure that the money trail would be captured or available to be found, who manages that, that’s treasury and tax, if you move over to BOI, or BOI, who manages that, that’s going to be treasury and legal, perhaps legal would take a lead in that Treasury supports it perhaps the other way. Whereas FBAR is oftentimes Treasury frequently tax, Treasury has to play a part in FBAR, Treasury will expect it to be at least playing some part in the BOI filing. And this is focused on who are the ultimate beneficial owners. And there were examples of Russian Russian, a call oligarchs and others who owned entities that received ERC money receive money from COVID, and have used that to launder money, they may not be signers on the account. But they’re beneficial owners. And so this is a way of weeding that out, eliminating that way that people have had their fun. So that’s, that’s probably the first first thing to think about between those two similar type of purposes and meant to close the loophole. So who is required to file for FBAR and how frequently is the filing? Well, FBAR filing is an annual filing, there’s a requirement for the institutions or corporations, as you can see on the bottom, and there’s a requirement for individuals. And if you have a 10,000, US dollar aggregate balance on any day, you’re required to file and so this originally started out FBAR started out with individuals who had funds, let’s say in Switzerland, you had over $10,000, you’re required to file so that there was not so that you wouldn’t be hiding, hiding money, and the ability to have that tax. So that was the original Star, but that expanded to institutions with a heavier focus on making sure that money wouldn’t be moved there. If there was money was moved, it would be able to be tracked to who moved it, especially was involved in crime or terrorism. And so there’s individual filing, if you were responsible for this, you have to sign on your tax form, you have to indicate what countries and then there’s an individual filing that needs to be made if you have foreign accounts, or if you have signing authority. And there’s two types of thority Signing Authority for institutions. On the institutional side, if you can sign and move money on an account for your company, you are considered a signer. If you have the ability on your own or acting with someone else to move money. In other words, if you have portal access, and you can approve a wire or initiate a wire, or transfer, that would be considered signing authority from thin cents perspective. And you can argue that it’s not really Signing Authority. It’s just funds transfer authority, but it’s defined there and specifically identified acting alone or in conjunction with another person can move funds. So that’s where the requirements are. So companies have to file as well as individuals. There are some exceptions. Lots of lots of you have been familiar with this for more than five or eight years, seeing the requirements. So that’s that’s FBAR. But let’s shift over from the annual FBAR filing requirements to BOI who is who is required to file. This would be these would be any type of, of reporting companies. And they’re identified with that definition, which says those that are required file, both domestic and foreign entity. So there’s a number of examples that have to have to file and FinCEN. Their estimation is that the first year, which would be in 2020, for the very beginning of this next year, over 32 million entities will be filing. So that’s a guess, but that’s what they think the first year. Afterwards, they think it’ll be about 5 million filings per year. And that’ll be filings for new new entities and for entities that either have a change, or if there’s an entity that needs to be corrected with the information that’s required to file for BOI, there’s a lot of companies that are excluded. If you just have a publicly traded company 100% fully owned subsidiaries, there’s expectation that there’s no requirement to file for those but when you have things like joint ventures, you might have LLCs that are not 100% reporting it might be hanging outside. There is a an example examples that you need to go through in some depth. But back on to FBAR there was a question Those that execute EFTPS on a bank Portal also have to be signers for FBAR. That is correct. That’s the FBAR definition, we can share more information, either separately, or we have some some material we can, we can share with you, we also have this continuing series. But yes, those that are physical bank signers as well as those that can move money for that’s for FBAR. So from a void perspective, those there’s a lot of companies that are exempt, and a lot of smaller companies, particularly LLCs, Limited Liability Partnerships that can be included. And they may be excluded, but they can be included. And it’s requires some work to look at that. So. So what needs to be reported. Beneficial ownership and for information reporting, or BOI, there’s initial requirements for the startup phase. So in January, every entity that has to file will have to file by then after that, it’s every time there’s a new company set up, there’s a change or correction, the filing has to be made and not made annually. But made within 30 days of the change, I just want to put that in your head, we got a an image for the flow in just a bit. And then we’ll show you that there’s two, two key names here that we’re going to emphasize beneficial owners, those who exert control, or they have ownership of more than a certain percentage, 25% or more of a reporting company. So substantial control can be the CEO. It can be someone who’s directing what the company’s doing, it could be a type of manager, or somebody and or somebody who has 25% of the ownership interest in a reporting company. So at a consumer level, if you set up an LLC, it’s not particularly large, and there’s three people on it all at 33%. They’re all beneficial owners all will have to file the first year, you won’t have to file after that until someone changes it’s sold is a difference. The corporate level, maybe you have a there’s a few LCS that are hanging out there separate, you’re not 100% owned, those would have to be filed. And if the company changes who’s who’s a owner, or who’s who has substantial control over this separate entity, a change will have to be filed, and the change has to be filed within 30 days of when that occurs. So BOI reporting is going to be when there’s a change in the future. But the timeframe is a 30 day window. Company applicants this is interesting when we start any entity that exist as of 1231. This year, you won’t have to file the company applicants because that’s considered I guess, grandfathered in, we’ll be how we put it. But after that, starting January 1, company applicants have to file as well. So those who file the the initial documents to set it up with a secretary of state, for example, or with one of the Indian entities in the US, those would be considered the company applicant. And there’s a maximum of two company applicants, but everybody who sets it up or is responsible for directing or controlling this type of filing. So the setting up of the entity, the applicant has to be identified. So if you need to get some entity set up, and you don’t want to file as a company applicant, get that stuff through before December, so you can avoid having to do one additional filing but beneficial owners is everyone. So thank you for that. Now let’s look at the deadlines. There’s, you know, we get concerned about deadlines and penalties. So this is just a way of visually showing you this information of the deadlines. We had Brian, I don’t know if you’re sticking a link in the chat box or just showing that at the end. But we have a document for you to sign a white paper to free to download not to sign too much on the signing part. But Jason, when people look at the deadlines, they’re gonna see existing entities and new entities. So existing entities are those that are registered before the end of this year. And then new entities are after that fact. But when you look at it, if you see the range, it’s like if you file before, you only have to do the beneficial ownership filing. You don’t have to you won’t have to report company applicants but you still have to report who the beneficial owners are. If they existed before December 31. The filing has to be done by January 1 2025, which means you want to file it during 2024. But that’s the reporting deadline. The system the boss system is going to be ready as expected to be ready January 1 2024. So you can file ahead of time for all of these existing companies, new entities, whenever it’s formed, this has to be filed within 30 days from forming, you have to file the beneficial owners and the company applicants, so new companies will have to be filed. If you start a company on January 1, by the 31st, you’re gonna have to file 30 days later, I guess for me to 33 I have to file who are the beneficial owners in the company applicant. So any entity formed in 2024 has to take place. Any changes that occur during 2024 and on have to be reported in 30 days, or if there’s an error, and you’re correcting it within 30 days of the discovery of the error. So we can think it’s a long time till January 1 2025. But it’s not you have to file before then. And you have to set up a process to report to report beneficial owners and company applicants prior to that time. So I know that’s going to generate dozens of questions. Are you gonna see some items in the chat box about where where you can add some more questions? We’re not going to get too many today? I know you have probably 100 questions, we’ll probably answer 50 of them on today’s webinar. We’ll try to continue from there. That brings us to poll question number two, it’s a stacked poll question. In other words, there’s two poll questions in one frame. These are select a single choice. And this is again, guess what it is the penalties for filing for failing to comply with BOI reporting can be up to 50 a day per account or 50 a day, 500 a day 5000 A day, rules on the penalties are not yet finalized. Those the options, and then the penalties for failing to comply with DOJ reporting include up to criminal penalties. There’s those there’s three options there. And so that’s the section on criminal penalty. So we’re identifying civil and criminal which are common in the different domains of compliance. But there are no no criminal penalties yet finalized. Or are there same thing with civilian rules? And if so, what the what are those? While you’re doing that, I would invite you to look in the chat box here is the download the white paper, there’s a short bit link, go ahead and click that download the white paper. I’m not saying we have a bet in the office about how many people will download it. But that would help me out quite a bit. So go ahead and click it download it. You’re not gonna be pestered any more than your pasture because you filled out your your name and email address is you’re already on the webinar. So that’s an option. And then finally, you know, be sure to follow strategic treasure on LinkedIn, that would be quite, quite helpful. Also, we’d love to connect with you as well. So Jason, what is the correct answer?


Jason Campbell  23:07

You know, I don’t know. Yeah, I think I think that that, you know, getting your expertise or, you know, looking at what we have going on the screen here, there’s a lot of different it’s something


Craig Jeffery  23:17

under $500 a day. Yeah. So 23% of you selected that. Pretty good. So we try to make that tricky. And the correct answer. This is interesting. It’s a $10,000 fine criminal penalties. $10,000. Fine. And two years in prison. That is 5% answered that way. So I was very tricky, and putting those together, but two years in prison for failing to comply with it. So there’s always the which ones are they doing if you’re intentionally trying to hide something, that’s when they tend to enforce it, the full measure, but that’s a $10,000 fine in two years in prison. So the two years in prison is the particularly hard part there puts a damper on quite a bit of the activities you want to be doing. All right, thank you for responding to those. I think we have enough poll responses,


Jason Campbell  24:13

we need more or no more, eight more,


Craig Jeffery  24:16

eight more, you can do it. We know you can do it. Alright, I’ll turn it back over to you. And I see we passed the limits are over, guys to great, Jason. What do people need to do about this? That’s, that’s the


Jason Campbell  24:32

that’s the big day, right? Because number one, I don’t know about anybody else. But I don’t look good. And orange or stripes. I just be honest, it’s not my color wheel. So to avoid two years of prison or any type of prison time is really what we’re trying to shoot for. Right? So we want to make sure that we’re in compliance here. So as we look at what’s on this, this, this flowchart here that we have and just kind of understanding, do you know whether your copy is subject to BOI or not? And I think Craig talked about this, you know, and he highlighted This piece of it how important it is to have the inventory of your entities. You know, when’s the last time? You know, as many organizations have grown, have changed, sold acquisitions, things of that nature as well, which really did you know, what’s, what does the company structure really look like and having an inventory and, and making sure your house is kind of cleaned up and buttoned up. So there’s time to respond now. So even though yes, as Craig said, 2025 is, you know, it’s really not that far away. If you really think about it, right? Here it is, it’s July of this year, and it’s gone by so fast, and you know, time will just continue to tick on. So it’s gonna be one of those things to want to be prepared and not have it all of a sudden sprung upon, you want to identify those exemptions and reporting obligations, and really understanding, you know, the full law itself around the reporting, and what really needs to be happened to ensure that you are in compliance and really have that determination of, you know, is your company subject to this requirement. And again, as Craig had mentioned earlier, you know, who’s responsible for BOI who’s responsible for FBAR, it’s just those things don’t understand working with Treasury and working with legal to make sure that your company, your organization isn’t compliant. And if it is subject to this, then there’s that reporting process, right, you know, you want to know where to capture the information to be reported, looking at those legal records, your bank account management database, those are just things to go ahead and start looping in, you know, whether it’s maybe you got to put an internal team together, maybe you’re already on top of that, which is great, this will be an easy process for you. And for those who may be you know, how long has it been, since an inventory check has occurred, there might be some, some appeals that be coming on your way pretty soon so and who’s going to capture it, who files it, and again, who supports it is really that legal, and that Treasury group, so there’s gonna be a lot of moving parts, there’s gonna be some collaboration. And it’s just really working with your internal teams to ensure that avoiding those orange and stripes jumpsuits. Alright, next slide. And as we talked about some key takeaways, you know, ideas and points bring back to the office. Right? So compliance. Number one, you want to ensure that you truly are compliant with both your FBAR and BOI if you’re subject to those items that are employed those senseless penalties, both from a monetary perspective. And then anything else that could be jeopardizing for an organization, you want to be thorough, as we talked about, just now, you want to be thorough take inventory. And it’s probably good to take stock already. If you haven’t, it’s good to ensure that you have what needs to occur in any of your entities and make sure you know what’s active and what’s not active and start that process to clean that up sooner rather than later. And then I think we talked about it Craig already, just like we’re doing this on this webinar today. But let’s go ahead and talk about those final two takeaways.


Craig Jeffery  27:43

So as you do the inventory of the entities, and you figure out who’s doing what the discussion between legal and Treasury acetate, please take the initiative. Don’t wait for the other group to talk about it. And you know, as as Jason said, you need to do an inventory now, because let’s say you have 100 entities in your corporate structure, and five of them are subject to it, you can have to do some filing very early, anytime there’s a change or correction, starting in January, or anytime you set up something new, so you have to have a process set up before the end of this year. The existing entities won’t need to be filed until January 1 2025. No later than then. So we do recommend getting that stuff done this summer. And we have information on the white paper that you can see what’s a tentative deadline. And then this is a good time. It’s something that’s been proposed. It’s a final rule. It’s coming. The data exists there. So learn read about it, we have a number of other topics, we have the white paper and consider getting the external help. Once you find out what’s going on. Getting additional help, it can make a lot of sense to smooth the process for you, particularly the beginning as you get up to speed. So like many people outsource FBAR filings, this, this could fall into that same category. Thanks for paying attention here. There’s information in the chat box about the white paper. Please go ahead and download that now. Particularly because I would like to win the bet we have.


Jason Campbell  29:15

Help Craig, please.


Craig Jeffery  29:19

Help me.  No jail time. But thanks. Thanks, Jason. And, Brian, we turn it back over to you now.


Announcer  29:25

Well, thank you, everyone for joining us today. The CTP credits, today’s webinar slides, and a recording of today’s webinar will be sent to you within five business days. And as Craig mentioned, for more on bank account compliance, specifically FBAR and BOI, be sure to download our white paper on this topic by clicking the link in the chat box. Thank you and we hope you have a good rest of the day.


Craig Jeffery  29:53

Thank you, bye.


Jason Campbell  29:55

Thanks, everyone.

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