Small businesses and their owners could face penalties of $10,000 or more if they don’t comply with a new U.S. Treasury Department reporting requirement by year’s end — and evidence suggests many haven’t yet complied.

The Corporate Transparency Act, passed in 2021, created the requirement. The law aims to curb illicit finance by asking many businesses operating in the U.S. to report beneficial ownership information to the Treasury’s Financial Crimes Enforcement Network, also known as FinCEN.

Many businesses have a Jan. 1, 2025, deadline to submit an initial Beneficial Ownership Information Report.

This applies to about 32.6 million businesses, including certain corporations, limited liability companies and others, according to federal estimates.

The Treasury Department did not respond to CNBC’s request for comment on the number of BOI reports that have been filed to date.

The data helps identify the people who directly or indirectly own or control a company, making it “harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures,” according to FinCEN.

“Corporate anonymity enables money laundering, drug trafficking, terrorism and corruption,” Treasury Secretary Janet Yellen said in a January announcement of the BOI portal launch.

Many Businesses May not be aware

Check with your accountant if you have questions about this new rule/requirement. A “beneficial owner” is a person who owns at least 25% of a company’s ownership interests or has “substantial control” of the entity, according to FinCEN.

Businesses must report information about their beneficial owners, including name, birth date, address and information from an ID such as a driver’s license or passport, in addition to other data.

Companies that existed prior to 2024 must report by Jan. 1, 2025. Those created in 2024 have 90 calendar days from their effective date of formation or registration to file; those created in 2025 or later have 30 days.

There are multiple exceptions to the requirement: For example, those with more than $5 million in gross sales and more than 20 full-time employees may not need to file a report.

Many exempt businesses — such as large companies, banks, credit unions, tax-exempt entities and public utilities — already furnish similar data.

Brian Nelson, the Treasury Department’s under secretary for terrorism and financial intelligence, said in an interview at the Hudson Institute in February that the agency was “on a full court press” to spread awareness about the BOI registry

There are many questions. For one, a federal court in Texas on Dec. 3 temporarily blocked the Treasury Department from enforcing the BOI reporting rules, meaning the agency can’t impose penalties while the court conducts a more thorough review of the rule’s constitutionality.

“Businesses should still be filing their information,” said Erica Hanichak, government affairs director at the Financial Accountability and Corporate Transparency Coalition. “The deadline itself hasn’t changed. It just changes enforcement of the law.”

The government is expected to appeal, and enforcement “could resume” if the injunction is reversed, wrote attorneys at the law firm Fredrikson.

Additionally, Treasury said it would only impose penalties on a person or business who “willfully violates” BOI reporting requirements.