Are CPA Firms Exempt from BOI Reporting?

For businesses, including Certified Public Accountant (CPA) firms, understanding legal and regulatory reporting requirements, such as those under the Bank Secrecy Act (BSA) can be a challenge. One of the common questions is whether CPA firms are required to report to the Beneficial Ownership Information (BOI) system. This article helps clear up confusion regarding BOI reporting and the CPA firm’s responsibilities when it comes to compliance.

What is BOI Reporting?

BOI stands for Beneficial Ownership Information. As under the BSA, companies are required to report information about individuals who own or control them. The aim is to make it more difficult for shell companies or fake ownership structures to hide behind, so as to prevent money laundering, fraud, and other illegal activities.

Why BOI Reporting Matters

BOI reporting has the following main goals:

• Identifying the real people behind companies to prevent money laundering
• Exposing hidden ownership structures to increase transparency
• Helping law enforcement to monitor suspicious financial activity

This reporting also helps authorities to track and stop illegal use of the financial system.

Are CPA Firms Financial Institutions?

In order to know whether CPA firms are required to file BOI reports, one must know what the law defines as “financial institutions.”

Financial institutions under the BSA are banks, credit unions, securities dealers, and some insurance companies. Accounting, auditing, tax preparation, and business consulting are the services most CPA firms provide. They are not financial institutions because these services do not qualify them as such.

What is Actually Done by CPA Firms?

CPA firms are important to the financial system, but they don’t have clients’ money like banks do.

Their core services include:

• Helping clients manage and plan their operations
• Reviewing financial records to make sure they are accurate and in compliance
• Providing guidance on investment strategies and financial planning

Since CPA firms are a type of work, they are regulated differently than banks and other financial entities.

Do CPA Firms Have to File BOI Reports?

No, CPA firms do not generally have to file BOI reports as they are not considered financial institutions according to the current rules. This does not mean that they are free from all compliance responsibilities.

When CPA Firms May Have BOI-Related Obligations

CPA firms can become subject to certain compliance rules, for example, under anti-money laundering (AML) regulations or when working with international clients.

These may include:

• Customer Due Diligence (CDD):Verifying the identity of clients
• Recordkeeping:Keeping proper records of client information and financial transactions
• Suspicious Activity Reporting (SAR):Notifying authorities of any potentially illegal activity

CPA Firms and FATCA

The Foreign Account Tax Compliance Act (FATCA) is another regulation CPA firms with international clients need to be aware of. Although FATCA is not specifically related to BOI, it serves to reinforce the need for global compliance awareness, and it is designed to stop U.S. taxpayers from hiding money in foreign accounts.

Do CPA Firms have any BOI Exemptions?

Yes—but it’s mostly by default. CPA firms are not considered financial institutions and, therefore, are usually not subject to BOI reporting. BOI filings are outlined by FinCEN, but they only apply to certain small businesses and financial entities, not to CPA firms.

However, CPA firms should be aware of changes in the regulatory environment that could impact their reporting obligations in the future.

Why Compliance Still Matters

CPA firms generally don’t have to file BOI reports, but they still need to build a strong compliance system.

It is best practice to prevent:

• Fines and penalties
• Loss of client trust
• Legal consequences

CPA Firms Can Strengthen Compliance

Here are a few key steps CPA firms can take to remain compliant:

• Have a Compliance Officer:Hire someone who will manage regulatory matters.
• Train Staff Regularly: Train staff on AML, data protection, and ethical standards on a regular basis.
• Internal Controls:Set up systems to monitor client activity and alert of potential problems.

Currently, laws do not require CPA firms to file BOI reports, but that does not mean they are exempt from all compliance duties. Firms need to stay informed, implement proper controls, and when needed, consult with legal or tax professionals. Compliance today isn’t about checking boxes; it’s about protecting your firm, your clients, and the integrity of the financial system.