As part of the Corporate Transparency Act passed in 2021, most businesses are required to submit their beneficial ownership information (the individuals who owns or controls the business) to the Financial Crimes Enforcement Network (FinCEN) starting January 1, 2024, unless they are part of the 23 exemptions. And for businesses formed or created in the year 2024 onwards, there is an additional FinCEN reporting requirement which is the information about their Company Applicant(s). 

What is a Company Applicant? 

A company applicant is the person who directly files the document that registers or creates the business. FinCEN allows up to a maximum of two individuals to be filed as the company applicants. So, if there are more than two persons involved in registering the business, the reporting company must identify the individuals who are primarily responsible in directing and controlling the filing. 

Identifying a Company Applicant 

Some would probably ask, isn’t the business owner a company applicant? Well, not necessarily. But a business owner can be a company applicant if he or she is the individual who directly filed for the business registration and creation. 

In cases where a reporting company hired accounting or law firms to manage its legal registration and creation, the respective firms must identify their personnel who are directly in charge or in control of the business registration filing.  

If an accountant or lawyer from a firm managed and directed the business creation, and then tasked another employee or paralegal from their firm to do the filing paperwork, then both the accountant or lawyer and the employee or paralegal are company applicants.  

A company applicant must be an individual; hence, companies and legal entities cannot be reported as the company applicants. 

What Information are Required to be Reported about a Company Applicant 

Same with beneficial owners, FinCEN requires the following information about a company applicant: 

• Name of the Company Applicant 
• Date of Birth 
• Address 
• An Identifying Number and the Issuing State or Jurisdiction of one of the following acceptable and non-expired documents: U.S. passport, U.S. driver’s license, or foreign passport. 
• An image of the identifying document 

If the company applicant is a person working for a business formation company, then the address to be reported is that of the business formation company address. Otherwise, it will be the address of the individual identified as the company applicant. 

The Company Applicant Information Dilemma 

Since the information required by FinCEN for company applicants are personal data, hired company applicants are found hesitant sharing such information with their clients. 

However, reporting companies have the right to obtain the required information from their company applicants. This is true even if the company applicant no longer has a connection with the company. 

The simplest solution is for the company applicants to get a FinCEN Identifier, a 12-digit number assigned to each requesting individual that can be used in BOI reporting instead of providing the required personal information. This will eliminate the risk of the information being shared to unintended users and of course the repetitive sharing of information to each of your clients. 

Compliance and Penalties 

FinCEN states the beneficial owners and company applicants who willfully causes the failure of the reporting company to submit their beneficial ownership information (BOI) may be subject to civil and criminal penalties. And this includes the willful refusal to provide the required information to the reporting company. 

The reporting company can also be penalized from $500 a day (subject to inflation adjustment) up to $10,000 for violating the BOI requirements, such as filing false information, willfully failing to correct information, or failing to file on time. 

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