Corporate Transparency Act (CTA) Compliance

The Corporate Transparency Act (CTA), effective January 1, 2024, mandates that many U.S. business entities report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). This requirement aims to enhance transparency and combat illicit financial activities.

Key Points

• Reporting Requirement: Entities such as corporations, limited liability companies (LLCs), and other similar structures must disclose information about individuals who own or control at least 25% of the company or exercise substantial control over it.
• Deadline: For entities formed or registered before January 1, 2024, the deadline to submit the Beneficial Ownership Information Report (BOIR) is January 1, 2025. Entities formed or registered on or after January 1, 2024, have specific deadlines based on their formation date.
• Penalties for Non-Compliance: Failure to file the BOIR by the specified deadline can result in significant penalties. Civil penalties may include fines of up to $500 per day for each day the violation continues, adjusted annually for inflation. As of 2024, this amount is approximately $592 per day. Willful violations can lead to criminal penalties, including fines up to $10,000 and imprisonment for up to two years.

Action Steps

1. Determine Applicability: Assess whether your business entity falls under the CTA's reporting requirements. Certain entities, such as publicly traded companies and specific regulated entities, may be exempt.
2. Gather Information: Collect the necessary details for each beneficial owner, including full legal name, date of birth, residential address, and a unique identifying number from an acceptable identification document.
3. File the BOIR: Submit the required information to FinCEN through their electronic filing system by the applicable deadline.

For comprehensive guidance and to ensure compliance, consult the official FinCEN website or seek legal advice.