From January 1, 2024, the Corporate Transparency Act (CTA) introduced a significant mandate for a broad spectrum of business entities in the United States. This act requires both newly established and existing corporations, limited liability companies (LLCs), and certain other types of entities to submit beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN), an agency within the U.S. Department of Treasury.
The primary objective of the CTA is to tackle illicit activities, such as money laundering and tax evasion, by accumulating more detailed information about the ownership of entities active in or engaged with the U.S. market.
Entities Obligated to File Under the CTA
The CTA encompasses various entities including LLCs, corporations, and others formed via filing documents with a Secretary of State or equivalent.
Each qualifying entity under this definition is categorized as a “reporting company.”
Nature of Reported Information
Reporting companies are required to submit comprehensive information about the entity and its beneficial owners to FinCEN. A beneficial owner is identified as an individual who has significant control over the company, or who owns or controls at least 25% of the company’s ownership interests.
Additional Reporting Requirements for New Entities
Entities created on or after January 1, 2024, must also provide detailed information about the "company applicant" – the individual responsible for filing the formation or registration documents.
Compliance Deadlines
Existing companies, those formed or registered before January 1, 2024, have until January 1, 2025, to submit their initial BOI report.
New companies formed or registered in 2024 are required to file within 90 days of formation or registration. Entities formed or registered from January 1, 2025, onwards have a 30-day deadline.
Privacy Measures
The information collected under the CTA is not publicly disclosed but is accessible to specific government agencies for law enforcement and regulatory purposes.
Filing Exemptions
Certain entities, such as publicly traded companies, large operating companies, and other specifically defined entities, may be exempt from the CTA’s reporting requirements.
Penalties for Non-Compliance
Failure to comply with the CTA, including not filing the required reports or submitting false information, can result in substantial penalties, including fines and potential criminal charges.
CTA’s Broader Impact
The CTA is expected to have a far-reaching impact on businesses, necessitating a reevaluation of internal compliance processes and corporate governance practices.
For businesses and entities potentially impacted by the CTA, it’s crucial to understand the specifics of these new requirements and take appropriate steps to ensure compliance. For detailed information on the Corporate Transparency Act, visit the FinCEN website or consult with legal professionals specializing in corporate compliance.
Seeking Assistance? If you require assistance, GB and Partners Law Office has U.S. attorney partners experienced in this area. For support and guidance, please contact us at info@gbplo.com.
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