EDITED: Since the original publication of this article, multiple legal challenges to the Corporate Transparency Act have been filed. Please read our article regarding those challenges and the effect on filing requirements here.
In 2021, Congress enacted the Corporate Transparency Act (CTA) with the stated goal of cracking down on anonymous shell companies, which have long been the vehicle of choice for money launderers, terrorists, and criminals. To achieve this goal, the CTA requires business entities to file a report disclosing certain information regarding their beneficial owners (BOI Report). The reporting requirements contained in the CTA became effective January 1, 2024. As a result, an estimated 30.6 million existing business entities will now be required to file a BOI Report to comply with the reporting requirements contained in the CTA.
The U.S. Treasury Financial Crimes Enforcement Network (FinCEN) has been tasked under the CTA with maintaining a database of Beneficial Ownership Information database of all companies in the United States. The information contained in the database will generally only be accessible to certain law enforcement personnel and only for authorized activities related to national security, intelligence, and law enforcement. Business entities may also authorize financial institutions and their regulators to be provided with information contained in the database. The information will not be publicly available.
The following sets forth a high-level summary of certain aspects of the CTA and is provided for informational purposes only. Business entities and their beneficial owners should conduct a detailed evaluation of their need to comply with the CTA’s requirements on an entity-by-entity basis.
Who has to file a BOI Report?
What companies are exempt?
When is a company required to file a BOI Report?
Which individuals must the entity report information on?
What constitutes Beneficial Ownership?
What constitutes Substantial Control?
What information about these individuals has to be reported?
Is there any continuing obligation?
What are possible penalties for failure to comply with the reporting requirements?
As noted, the above information is merely a summary of certain aspects of the CTA. The breadth and complexity of the CTA’s requirements can be confusing and overwhelming. We here at GGTM Law are prepared to assist you and your business entities in navigating the compliance requirements of the CTA. Feel free to reach out to one of our business attorneys to schedule a consultation to discuss the CTA and its reporting requirements.
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