Understanding Exemptions from the FINCEN BOI Reporting

An entity is eligible for exemption #1 if it applies to either of the following criteria:

• The entity is a registrant of a securities class under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l).
• The entity is mandated to submit supplementary and periodic information under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)).

An entity qualifies for exemption #2 if both of the following criteria are met:

• The entity is formed according to the statutes of the United States, an Indian tribe, a State, or a political subdivision of a State, or through an interstate compact involving two or more States.
• The entity exercises governmental authority on behalf of the United States, an Indian tribe, a State, or a political subdivision.

An entity qualifies for exemption #3 if it applies for any of the following three criteria:

• The entity meets the definition of a "bank" as outlined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
• The entity is classified as a "bank" as specified in section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)).
• The entity satisfies the definition of a "bank" as provided in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)).

An entity qualifies for exemption #4 if it applies to either of the following two criteria:

• The entity falls within the definition of a "Federal credit union" as outlined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).
• The entity meets the "State credit union" criteria in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).

An entity qualifies for exemption #5 if it applies for either of the following two criteria:

• The entity meets the "bank holding company" definition outlined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).
• The entity qualifies as a "savings and loan holding company" as described in section 10(a) of the Home Owners' Loan Act (12 U.S.C. 1467a(a)).

An entity qualifies for exemption #6 if it applies for either of the following two criteria:

• The entity is a registered money-transmitting business with FinCEN under 31 U.S.C. 5330.
• The entity is a registered money services business with FinCEN under 31 CFR 1022.380.

An entity qualifies for exemption #7 if it applies to both of the following criteria:

• The entity falls within the definitions of a "broker" or "dealer" as provided in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c).
• The entity is duly registered under section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o).

An entity qualifies for exemption #8 if it applies to both of the following criteria:

• The entity qualifies as an "exchange" or "clearing agency," as delineated in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c).
• The entity is duly registered under sections 6 or 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78f, 78q-1).

An entity qualifies for exemption #9 if it applies to both of the following criteria:

• The entity does not fall under the categories of a securities reporting issuer as defined in Exemption #1, broker or dealer in securities as defined in Exemption #7, or securities exchange or clearing agency as defined in Exemption #8.
• The entity is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).

An entity qualifies for exemption #10 if it applies to both of the following criteria:

• The entity is an “investment company” or “investment adviser” defined as either:
  • Section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3) for investment companies, or
  • Section 202 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2) for investment advisers.
• The entity is registered with the Securities and Exchange Commission under either of the following authorities:
  • The Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), or
  • The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.).

An entity qualifies for exemption #11 if it applies to both of the following criteria:

• The entity is an investment adviser specified in section 203(l) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(l)).
• The entity has submitted Item 10, Schedule A, and Schedule B of Part 1A of Form ADV, or any equivalent successor form, to the Securities and Exchange Commission.

An entity qualify for exemption #12 if it applies to the following criterion :

• The entity meets the "insurance company" definition outlined in section 2 of the Investment Company Act of 1940 (15 U.S.C. 80a-2).

An entity qualifies for exemption #13 if it applies to both of the following criteria:

• The entity is an insurance producer authorized by a State and supervised by the insurance commissioner or an equivalent state official or agency of a state.
• The entity maintains a physical office in the United States and conducts its business operations regularly. The term "operating presence at a physical office within the United States" refers to the entity's consistent business activities at a physical location owned or leased by the entity, which is separate from the premises of any other unrelated entity.

An entity qualifies for exemption #14 if it applies to either of the following two criteria:

• The entity falls within the "registered entity" definition as outlined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a).
• The entity is one of the following entities registered with the Commodity Futures Trading Commission under the Commodity Exchange Act:
  • "Futures commission merchant" as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a);
  • "Introducing broker" as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a);
  • "Swap dealer" as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a);
  • "Major swap participant" as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a);
  • "Commodity pool operator" as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a);
  • "Commodity trading advisor" as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a); or
  • "Retail foreign exchange dealer" as described in section 2(c)(2)(B) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(B)).

An entity qualify for exemption #15 if it applies to the following criterion:

• The entity is a public accounting firm registered under section 102 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7212).

An entity qualifies for exemption #16 if it applies to both of the following criteria:

• The entity falls under the definition of a "regulated public utility" as outlined in 26 U.S.C. 7701(a)(33)(A).
• The entity offers telecommunications services, electricity, natural gas, or water and sewer services within the United States.

An entity qualify for this exemption #17 if it applies to the following criterion:

• The entity is identified as a financial market utility by the Financial Stability Oversight Council by section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010 (12 U.S.C. 5463).

An entity qualifies for exemption #18 if it applies to both of the following criteria:

• The entity qualifies as a pooled investment vehicle if it meets either of the following criteria:
  • It is recognized as an investment company, as defined in section 3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-3(a)); or
  • It meets the conditions to be considered an investment company under that section, except for the exclusions provided from that definition by paragraph (1) or (7) of section 3(c) of that Act (15 U.S.C. 80a-3(c)). It is identified by its legal name by the relevant investment adviser in its Form ADV (or successor form) submitted to the Securities and Exchange Commission or will be so identified in the subsequent annual updating amendment to Form ADV mandated to be filed by the relevant investment adviser under rule 204-1 under the Investment Advisers Act of 1940 (17 CFR 275.204-1).
• The entity is managed or advised by any of the following exempt entities:
  • A bank(Exemption #3)
  • A credit union (Exemption #4)
  • A broker or dealer in securities(Exemption #7)
  • An investment company or investment adviser(Exemption #10), or
  • A venture capital fund adviser(Exemption #11)

An entity qualifies for exemption #19 if it applies to any of the following four criteria:

• The entity is an organization that falls within the parameters of section 501(c) of the Internal Revenue Code of 1986 (the Code) and is exempt from taxation under section 501(a) of the Code, irrespective of section 508(a) of the Code.
• The entity is an organization classified under section 501(c) of the Code. It was previously tax-exempt under section 501(a) of the Code but had its tax-exempt status revoked within the last 180 days.
• The entity is a political organization, as defined in section 527(e)(1) of the Code, and holds tax-exempt status under section 527(a) of the Code.
• The entity is a trust that meets the criteria outlined in either paragraph (1) or (2) of section 4947(a) of the Code.

An entity qualifies for exemption #20 if it applies to all four of the following criteria:

• The entity solely operates to offer financial support to, or exert governance control over any tax-exempt entity described in Exemption #19.
• The entity qualifies as a United States person according to the definition provided in section 7701(a)(30) of the Internal Revenue Code of 1986.
• The entity is exclusively owned or controlled by one or more United States persons who are either United States citizens or have been lawfully admitted for permanent residence. "Lawfully admitted for permanent residence" is defined in section 101(a) of the Immigration and Nationality Act (8 U.S.C. 1101(a)).
• The entity receives the majority of its funding or revenue from one or more United States persons who are either United States citizens or have been lawfully admitted for permanent residence.

An entity qualifies for exemption #21 if it applies to all six of the following criteria:

• The entity employs more than 20 full-time employees, as defined in 26 CFR 54.4980H-1(a) and 54.4980H-3, where a "full-time employee" generally means an employee who works an average of at least 30 hours per week for the employer.
• More than 20 full-time employees of the entity are located in the "United States," as defined in 31 CFR 1010.100(hhh).
• The entity maintains an operational presence at a physical office within the United States. An "operational presence at a physical office within the United States" signifies that the entity regularly conducts its business activities at a physical location in the United States, either owned or leased by the entity, which is physically separate from the premises of any other unrelated entity.
• The entity filed a Federal income tax or information return in the United States for the previous fiscal year, demonstrating gross receipts or sales exceeding $5,000,000. If the entity is part of a group of affiliated corporations under 26 U.S.C. 1504, reference should be made to the consolidated return for such a group.
• The entity reported gross receipts or sales (net of returns and allowances) exceeding $5,000,000 on its IRS Form 1120, consolidated IRS Form 1120, IRS Form 1120-S, IRS Form 1065, or any other relevant IRS form.
• Even after excluding gross receipts or sales from sources outside the United States, as determined under Federal income tax principles, gross receipts or sales still exceed $5,000,000.

An entity qualifies for exemption #22 if it applies for the following criterion:

The entity's ownership interests are controlled or completely owned, either directly or indirectly, by any of the following exempt entities:

An entity qualifies for exemption #23 if it applies to all of the six following criteria:

• The entity was established on or before January 1, 2020.
• The entity is not actively conducting business operations.
• The entity is not owned, whether directly or indirectly, wholly or partially, by a foreign individual or entity. A "foreign person" refers to an individual or entity that is not considered a United States person, as defined in section 7701(a)(30) of the Internal Revenue Code of 1986. This includes citizens or residents of the United States, domestic partnerships and corporations, as well as certain estates and trusts.
• The entity has yet to undergo any changes in ownership within the preceding twelve-month period.
• Within the past twelve months, the entity has neither sent nor received funds exceeding $1,000, either directly or through any financial account in which the entity or any affiliated entity holds an interest.
• The entity does not possess any assets, whether within the United States or abroad, nor does it hold any ownership interests in corporations, limited liability companies, or similar entities.