FinCEN and Beneficial Ownership Information Reporting Requirements
The Financial Crimes Enforcement Network (“FinCEN”) is an agency of the Treasury Department that operates to safeguard the financial system from illicit use and to combat domestic and international money laundering, terrorist financing, and other financial crimes.
As a part of the Corporate Transparency Act, FinCEN has issued a Final Rule that will take effect on January 1, 2024, which will require certain entities to file reports that identify two categories of individuals: (1) the beneficial owners of the entity and (2) the individuals who have filed an application with specified governmental authorities to create the entity or register it to do business.
The Final Rule identifies two types of “reporting companies,” domestic and foreign. A domestic reporting company is a corporation, limited liability company, or any entity created by the filing of a document with the secretary of state or any similar office under the law of a state or Indian tribe.
The Final Rule defines a “beneficial owner,” as anyone who, directly or indirectly, owns or controls at least 25% of the ownership interests of a company registered to do business in the U.S. or someone exercising “substantial control” over such a company.
The requirement will necessitate the reporting of beneficial ownership information, which includes name, birthdate, and address for each beneficial owner. In addition to these three pieces of information, a unique identifying number from an identification document acceptable to FinCEN will need to be provided, along with an image of that document, for each beneficial owner.
The intention of this reporting requirement is to prevent criminal actors from using anonymous shell companies and other corporate structures to hide their illicit gains. These criminal actors could include oligarchs, terrorists, drug and/or human traffickers. In support of this effort to stop such illicit actors, Credit Unions and Banks will have to collect beneficial ownership information from the companies they do business with.
The Final Rule provided a timeline for reporting entities: (1) a reporting entity that was created or registered before January 1, 2024, will have one year (January 1, 2025) to file their initial reports and (2) reporting entities created or registered after January 1, 2024, will have thirty days after creation or registration to file their initial reports.
To accommodate the beneficial ownership information, FinCEN is developing a Beneficial Ownership Secure System (“BOSS”) to store and secure the data it receives. FinCEN’s current rules state that Credit Unions and other financial institutions may only have limited access to BOSS data. Additionally, and of more concern, Credit Unions and other financial institutions may be liable for civil or criminal penalties if they do not safeguard beneficial ownership information. Sorenson Van Leuven will continue to monitor for more information and guidance regarding potential penalties for failure to comply with the reporting requirements.
FinCEN is set to provide more guidance in preparation for the January 1, 2024, effective date. Future guidelines will help Credit Unions comply with this new reporting requirement. Furthermore, FinCEN is set to prepare a “Small Entity Compliance Guide” that will help inform small entities required to file reports.
Sorenson Van Leuven will continue to review the Final Rule and update its clients on any additional guidance provided by FinCEN in preparation of the effective date. If you have any questions or concerns regarding the beneficial ownership information reporting requirement, do not hesitate to reach out to SVL.
Recent Changes to Service of Process in Florida
In 2022, the Florida Legislature passed S.B. 1062, which made significant changes to the procedures for service of process in the state of Florida. The changes impact service of process on business entities but do not change the procedure for service of process on an individual. S.B. 1062 took effect on January 2, 2023.
Service of process is the process or procedure by which a party is given notice of a pending lawsuit. Without proper service of process, the lawsuit or legal action cannot proceed forward. If a party files a legal action and cannot complete service of process, the lawsuit will be dismissed.
The way the statute is structured is to promote service of process first on the business entity’s registered agent (if one exists). A registered agent is a person appointed by the business to accept service of process on behalf of the business entity. In Florida, a registered agent can be a person or business entity. Some business entities, such as corporations, are required to appoint a registered agent. Financial Institutions, including Credit Unions, are not required to appoint a registered agent but can appoint one under Section 655.0201, Florida Statutes.
If service cannot be accomplished on a registered agent, then service of process can be made on the business entity’s representatives (owners or officers). The party seeking to serve process only has to attempt service of process once on the registered agent. After one good faith attempt, the party can proceed to serve the appropriate business entity’s representatives, identified in the statute. For example, when serving process on a corporation, serving the board chair, president, any vice president, secretary, treasurer, or person listed on the corporation’s latest annual report will be sufficient. If attempting to serve a limited liability company, the party can serve the managers, if manager-managed or a member (owner).
As a last resort, service can be had on the Florida Secretary of State or through electronic means. To serve the Florida Secretary of State, service can be accomplished by electronic filing, personal service through process server or sheriff, or through certified mail. The statute also provides an alternative to service on the Florida Secretary of State, which is the ability to serve through other “reasonable means.” This requires that a party file a motion with the Court to establish their right to use the alternative means method. These alternative means can include email or other electronic means. If the court approves the motion, then the party can effectuate service via email or other approved electronic means.
The changes should make litigation against business entities less expensive, time consuming, and eliminate some of the prior disputes over service of process on a business entity. We do recommend that each Credit Union have a registered agent for service of lawsuits and other legal notices. Should you have questions about this new law or the appointment of a registered agent, please do not hesitate to contact a lawyer at Sorenson Van Leuven Law Firm.
Staff Spotlight on Jazmin Gallien
Jazmin is originally from Louisiana. She moved to Florida in 2021 after her dad and her twin brother, Jordan, persuaded her to come to the sunshine state! She joined the SVL Team in February of 2023 and she is a legal assistant in our post-judgment department. Jazmin is a mother of three wonderful children, ages 7, 8, and 10. Alijah, 7, her youngest son, loves karate and enjoys lego creating; Ariana, 8, enjoys dancing, being silly, and riding her bike; and Dina, 10, likes swimming, reading, singing, and dancing!
When Jazmin is away from the office, she enjoys spending time with her boyfriend, going to the beach, and sitting at a local lake here in Tallahassee to watch the wildlife. She also spends much of her time at the park with her kids, nieces, and nephews who keep her busy! One fun fact about Jazmin is that she likes to cook creole/Cajun cuisine – gumbo, jambalaya, and crawfish etouffee. Her favorite thing is to bake. She makes an incredible mud pie and banana pudding. Jazmin would love to own her own café one day.
Jazmin, thank you for all you do at Sorenson Van Leuven! We look forward to many more years with you.
Staff Spotlight on Magdalene Nwokeji
Magdalene joined the SVL Team in February of this year as our newest bankruptcy legal assistant. Originally from Sarasota, Florida, Magdalene came to Tallahassee for college and stayed here after graduating, seeking a job. After the pandemic, she was interested in the concept of consumer debt and how it related to the financial system. Sorenson Van Leuven caught her eye as she was browsing the internet. She appreciated the personalized and educational touch that the website had compared to other law firms. She applied for the open position we had available and now Magdalene is apart of the Bankruptcy Team, assisting our clients with Ch. 7 and Ch. 13 cases that have been filed by their Credit Union members.
Away from the office, Magdalene enjoys spending time with friends, reading, and being “in the know” about world and political events. She also likes to dance and listen to music. She loves makeup and all things fashion too! Magdalene also loves cats and considers herself a “cat whisperer.” She doesn’t own any cats, but every cat that she meets loves her (even ones that she’s never met before). There is one cat in particular who visits her house, which she considers to be “unofficially officially” hers now.
We are thankful to have Magdalene as a part of our Sorenson Van Leuven Team. She is a valuable asset to our firm and we appreciate all that she does!
Out of Office
On Saturday, May 13, SVL hosted a Family Fun Day at a local hangout – District 850. We enjoyed bowling, laser tag, and fun arcade games for the afternoon. It was a fun time away from the office spending time with our co-workers, their spouses, and their children. We are looking forward to the next staff get-together later this year!
2023 CUCP Summit
Our firm sponsored and attended the 2023 Credit Union Collection Professionals (CUCP) Summit in Orlando on May 17-19, 2023. The mission of the CUCP is to develop, educate, promote, and provide a professional support system to all people in the Credit Union movement. Attorney Steve Orsillo from our office spoke on the topic of Negotiation Strategies and was also a part of a panel on Legal Hot Topics. It was a great time networking with some of our current Credit Union clients and also building new relationships too. Thank you CUCP for including us!
