State-Level BOI Requirements Reinforce the Corporate Transparency Act (CTA)

Beneficial Ownership Information (BOI) requirements are a cornerstone of corporate transparency in the U.S. These regulations, introduced at both federal and state levels, are designed to prevent illegal activities such as money laundering and tax evasion by ensuring businesses disclose information about their owners. The District of Columbia (DC), along with states such as South Dakota (SD) and New York (NY) have put their own BOI laws into place, further reinforcing the broader federal mandate. These state-specific requirements emphasize the fact that federal BOI regulations are here to stay—and businesses need to be prepared.

District of Columbia BOI Requirements

The District of Columbia implemented Beneficial Ownership Information (BOI) requirements in 2020, establishing essential guidelines for businesses registered in the state. Under these regulations, every entity must disclose the names, residence, and business addresses of individuals with direct or indirect, legal or beneficial ownership of a governance or total distributional interest in the entity. Specifically, this includes anyone whose ownership exceeds 10%. Additionally, individuals who do not exceed this threshold must still be disclosed if they control the financial or operational decisions of the entity or have the ability to direct its day-to-day operations.

This requirement applies to both entity registration filings and biennial reports, ensuring that relevant ownership information is consistently updated. If a change occurs before the biennial filing is due, entities should file an amendment to update this information. For foreign entities, similar disclosure requirements apply, necessitating the identification of individuals with significant ownership or control. 

DC’s regulations align closely with federal BOI mandates, serving as a reminder that businesses operating within the District must comply with both state and federal standards. The continued enforcement of these laws highlights the growing expectation for corporate transparency across all jurisdictions.

South Dakota BOI Requirements

South Dakota’s BOI regulations specifically address foreign ownership of agricultural land, a unique aspect of their compliance framework. Under SD Statute § 59-11-24, businesses that own agricultural land in South Dakota must disclose whether they have any foreign beneficial owners. Section (6) of this statute mandates that entities owning agricultural land report the identities of their beneficial owners, particularly focusing on foreign individuals or entities that hold ownership stakes.

This state-specific regulation exemplifies how BOI requirements can be tailored to local concerns—in this case, foreign investment in agricultural land. However, South Dakota’s compliance rules also echo the broader national trend: BOI compliance is critical, whether it’s for federal, state, or even industry-specific reasons.

New York BOI Requirements

In New York, a new law proposed in Senate Bill 8059 establishes guidelines for identifying who is considered a “beneficial owner” of a limited liability company, or LLC. A beneficial owner is defined as someone who directly or indirectly owns 25% or more of the company’s equity interests. This means that if you hold a quarter of the ownership in an LLC, you are classified as a beneficial owner. Additionally, even if a person owns less than 25%, they can still be considered a beneficial owner if they have significant control or influence over the company’s decisions.

The law applies specifically to reporting companies, which includes any LLC formed or authorized to do business in New York. However, some companies are classified as exempt and do not need to follow these disclosure rules. These exempt companies meet specific criteria set out in federal law.

To comply with the new law, all reporting companies must file a beneficial ownership disclosure with the New York Department of State. This disclosure must include the names of all beneficial owners and details about individuals who have control over the company.

It’s important to note that requirements in other places, such as Washington, D.C., differ slightly. In D.C., the reporting threshold is lower, requiring disclosure for anyone who owns 10% or more of a company. In contrast, the federal law also requires reporting for those who own 25% or more.

While the law is not yet in effect, New York’s adoption of BOI requirements underscores the importance of BOI regulations nationwide. As with other states, New York’s alignment with federal BOI mandates reinforces the idea that businesses need to adapt to an evolving regulatory environment where transparency is the new standard.

Federal BOI Requirements Aren’t Going Anywhere

The introduction and enforcement of BOI requirements across states like DC, South Dakota, and New York serve as a clear signal: federal BOI requirements are here to stay. The Corporate Transparency Act (CTA), passed as part of the Anti-Money Laundering Act of 2020, requires 97% of businesses registered in the US to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). These state-level laws align with the federal mandate and reinforce the importance of BOI compliance across the board.

Businesses should not expect BOI requirements to fade away. Instead, they must stay vigilant and ensure they meet both state and federal obligations. The growing number of states enacting their own BOI laws illustrates the permanence of these regulations, signaling the need for businesses to prioritize transparency in their ownership structures.

Put the Federal BOI Reporting Requirement on Autopilot

At Harbor Compliance, we understand that millions of companies in the U.S. must report beneficial ownership information (BOI) to meet federal requirements. Our full-service support offers an easy way to navigate these obligations. When you sign up, you’ll benefit from simple, secure online information collection, centralized data storage that makes tracking and updating information effortless, and automated notifications to keep you informed about ongoing filing requirements. We also provide filing support for initial, updated, and corrected reports, allowing you to focus on what matters most—your core business operations.

Additionally, our Records Manager is included to help you maintain accurate beneficial owner information for state-level requirements. This tool securely stores your essential organizational documents, such as articles of incorporation and meeting minutes, tailored for your specific entity type. It tracks internal meetings and sends reminders based on your preferences, ensuring you never miss an important date. After each meeting, Records Manager securely stores your minutes and resolutions, reducing the time spent searching for corporate records and improving compliance during transitions. With Harbor Compliance, you can simplify your reporting process and ensure that all your beneficial ownership information is organized and up to date.

Order our service today, or feel free to contact us with any questions you may have.