Restaurants could face a fine of up to $10,000 for failing to comply by Jan. 1 with a sleeper of a federal requirement aimed at foiling money launderers and other crooks trying to mask illegal business activities.
The measure obliges most small corporations and limited liability companies to file a report by next year revealing what individuals actually own them.
High-volume restaurants could be exempted. A business does not have to comply if it has a U.S. headquarters, employs at least 20 workers domestically and reported at least $5 million in gross sales in its last annual tax filing with the Internal Revenue Service.
Smaller operations founded after Jan. 1, 2024, could already be in violation of the measure if 90 days have passed since they were created, as determined by when their formation was officially certified by a government body. The penalties amount to $591 per day, up to the $10,000 ceiling.
Qualifying companies formed before Jan. 1 have to file their beneficial ownership information, or BOI, before the start of next year or face those sanctions. They will be required to file only that one time unless they undergo a change in control. Then the 90-day deadline kicks in.
The information is being collected by the U.S. Department of Treasury’s Financial Crimes Enforcement Network into a database available to law-enforcement bodies. According to the unit, also known as FinCen, the information can be analyzed to flag shell companies that are laundering money or otherwise using legitimate-sounding businesses to hide criminal activity like importing fentanyl or supporting terrorism.
The 2024 filing requirement has been a looming reality for restaurateurs and other business operators for two years, since rules were promulgated by the Treasury Department to implement the Corporate Transparency Act, a law passed in January 2021. With the filing deadline of Jan. 1, 2025, creeping up on the business community, FinCen officials have been blitzing the country to publicize the requirement. The agency is also running TV ads, as it did during NFL games last Sunday.
“Why is it so important for small businesses to report beneficial owners, the real people behind their companies?” FinCen Director Andrea Gacki rhetorically asked during an outreach session in Media, Pennsylvania. “Terrorist financiers, drug kingpins, and other criminals use anonymous corporate structures to launder, move, and hide illicit funds into and through the United States. This dirty money undermines legitimate business activity and compromises U.S. economic and national security.”
The agency stresses in its publicity efforts that the filing can be done online, takes only a few minutes and usually does not require the services of an attorney.
The regulations exempt 23 types of companies from the requirement. Ironically, given the underlying intent of the requirement, most of the excused concerns are in the finance business. They include banks, insurance companies, investment firms and financial advisors. Nonprofits are also exempted.
Restaurants could qualify under the “large operating company” exemption if they employ more than 20 people and had gross annual sales of at least $5 million. Places that have suspended operations may also be excused.
More information is available from the BOI section of FinCen's website.
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