Treasury Secretary Janet Yellen Affirms Deadline for Beneficial Ownership Reporting

Janet Yellen, the Secretary of the U.S. Department of the Treasury, has confirmed that there are no plans to extend the deadline for small firms to file beneficial ownership information. “I don’t think it’s going to be necessary to extend the timeframe,” she told the U.S. House Committee on Financial Services.

According to current regulations, companies registered to do business in the U.S. before the start of 2024 must file beneficial ownership information with the Department of the Treasury by January 1, 2025. Ms. Yellen indicated that there has been ongoing outreach from officials and that the agency is seeing what it considers a good amount of reporting thus far.

She assured that FinCEN, the Treasury’s AML body overseeing the implementation of beneficial ownership reporting, will not unduly burden small firms. “FinCEN is not going to prioritise going after small businesses,” she said.

Ms. Yellen is the latest in a series of high-profile U.S. financial officials attempting to reassure the small business community about beneficial ownership reporting, which will become mandatory for the majority of companies under the Corporate Transparency Act. In May, the National Federation of Independent Businesses (NFIB) filed a lawsuit challenging the Corporate Transparency Act. The NFIB argued that beneficial ownership requirements “improperly compels speech and burdens associations, it unconstitutionally compels disclosure of private information, and the reporting rule is not in accordance with the law.” The organization also stated that the Act puts small businesses “at risk of being subjected to civil and criminal penalties for simple paperwork violations.”

In June, FinCEN Director Andrea Gacki addressed a small business event, stating that beneficial ownership reporting requirements are focused on catching criminals and will not be used as a ‘gotcha’ to penalize small firms.

Ms. Yellen was also questioned about the possibility that small companies could face fines of up to $250,000 for failing to file beneficial ownership information. “The fine is for a ‘willful’ violation,” she explained, though she could not provide an example of a ‘willful’ violation when pressed by committee members.

By fLEXI tEAM