Any individual who can directly or indirectly exercise substantial influence over a reporting company is considered a beneficial owner. Examples of such individuals include the Chief Executive Officer, President, and General Counsel. Additionally, anyone who owns or controls 25% or more of the company’s voting stock or equivalent is also classified as a beneficial owner.

Each reporting company must provide FinCEN with the following details for every beneficial owner:

• Name
• Address
• Date of birth
• Identification number from a government-issued document (e.g., driver's license)

FinCEN Definition of Beneficial Owner

FinCEN defines a beneficial owner as any individual who:

• Exercises substantial control over a reporting company, or
• Owns or controls at least 25% of the ownership interests of a reporting company.

The rule outlines the terms “substantial control” and “ownership interest” in a way that captures anyone capable of making critical decisions for the company. This is intended to close loopholes in corporate structures that obscure ownership or decision-making authority, which is key to preventing the misuse of anonymous shell companies.

Standards for Identifying Beneficial Owners

FinCEN’s rules provide clear standards for determining whether an individual owns or controls 25% of a company’s ownership interests. These rules address complex situations, such as when ownership interests are held in trust, and aim to account for different ownership or control structures that companies may adopt.

For most reporting companies with simple organizational structures, identifying and reporting beneficial owners should be straightforward. FinCEN expects the majority of reporting companies to fall into this category.