Many domain investors need to file a Beneficial Ownership statement

New requirement kicks in this year for companies to file ownership statements.

U.S. domain name investors who operate their business as a limited liability company or corporation have a new 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 before 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 company as those that meet one of two qualifications:

1. Controls at least 25% of the ownership interests of the company OR
2. Exercises “substantial control” of the company

“Substantial control” is broadly defined. It includes senior officers and “important 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.

Because some people are a beneficial owner of many companies, individuals can also apply for a FinCEN ID. This captures their information and allows them to provide the ID to companies that are submitting the reports, rather than provide the same personal information to each entity for submission.

There might be an advantage to holding off on submitting your report. There are legal challenges to this new requirement, and it’s possible a delay or overhaul will take place before the deadline. But you should pencil in to check on this before the deadline; penalties for non-compliance can be up to $10,000 and two years in prison.