WTL…? What’s That Lawyer Saying? The Financial Crimes Enforcement Network and ME?

By Jonathan Hustis

Who, with a life worth living, would want to read or hear about FinCEN ID numbers?

The beneficial owners of one or more small business entities should know about FinCEN ID numbers. I suggest that you get one. Read on, for some good reasons and further considerations.

1)      Privacy is one good reason. Filing for a FinCEN ID number with the US Treasury Department avoids spreading your name, address, a copy of your driver’s license or passport, and other private information (PI) to people you don’t know. Those helpful employees and contractors who file your private information in federal reports, even though on your business’s behalf, create a risk of leakage just by handling your data. Less handling of your PI by others means less mishandling, and less risk that it’s going to leak inadvertently to bad actors, causing you unexpected financial damage and lots of distraction. Using the FinCEN ID number cuts down on the handling and the associated risks.

2)      Simpler Compliance is another. Since January 1, 2024, somebody must file those Beneficial Ownership Information Reports that are newly required under the US federal  Corporate Transparency Act (CTA). If you file them, wouldn’t you rather enter in one short number each time you do it, rather than re-enter multiple fields and uploads of your personal data, and risk making a mistake?  Even if you are having someone else file the BOIRs for you, then privacy is still a concern, per Item #1 above.

3)      Looking Ahead is a third. Do you think that regulatory filings and the inclusion of private information in your business filings will decrease in the future?  I don’t think so. But it’s a reasonable bet that various other federal and state agencies will find the FinCEN ID number to be a helpful tool for identifying individuals without exposing their social security numbers or other personal data.

So, then, are there any reasons NOT to file? I don’t think so. Here are some things to consider.

1)      Another Form or Two to File, But It’s Quick. It is true that you will have to file for a FinCEN ID number. It is easy to do this online. First you need a login.gov account with the federal government. If you don’t have one already, you can go through the process when you go to https://fincenid.fincen.gov. From there, you are directed to login.gov, where you can learn a little about login.gov for individuals, then click through to create an account, at https://login.gov/create-an-account/. This is a one-stop log-in account for more than 40 government agencies, including the Department of Treasury, the Social Security Administration, and Homeland Security. It seems to work pretty well, much better than the individual login pages from a few years back. It is convenient. Once you’re done with that, then you follow up to create your FinCEN ID application. The results are nearly instantaneous.

2)      One More ID Number to Keep Track Of, But It’s Convenient. Well, you are probably already tracking your social security, driver’s license, passport, employer ID number (EIN), and maybe other numbers. The FinCEN ID may allow you to do less looking around for them, and less leaving them around your desk and in your pockets on post-it notes. At any rate, everybody needs a good, encrypted password safe these days, with encrypted ID information cards. It is not hard to add another number. Then the new ID and other numbers will be available to you easily on your phone, computer, or other encrypted device. Good data security is important with any identifying number.

3)      Another Data Risk. Now, perhaps, you can worry that someone may hack your information from the Treasury Department or another agency where you have used your FinCEN ID but also added other private information to the related data store. That is a risk, but it does not seem to be a significant increase, in exchange for better privacy, convenience, and compliance execution in other channels.

Conclusion. My advice? If you are a small business owner, go to https://fincenid.fincen.gov/, get your FinCEN number, and store it in a reliable, encrypted password safe as part of your business identity toolkit.

By the Way, to Learn More. Small business entity beneficial owners will want to know enough about the above-mentioned Federal Corporate Transparency Act (CTA), to avoid criminal and civil penalties. You risk the penalties by ignoring the rules, and you avoid the penalties by following the rules.

Fulton | Jeang partner Joe Garza has a good description in his September 2023 article titled  New Private Company Reporting Requirements on our website.