The Corporate Transparency Act (CTA), part of the Anti-Money Laundering Act of 2020, has introduced
new reporting requirements for disclosing beneficial owners of specific entities in the United States.
These requirements, implemented by the Financial Crimes Enforcement Network (FinCEN), aim to
enhance transparency in company ownership to combat money laundering, terrorism financing, and
other illegal activities.
KEY ASPECTS OF THE NEW REPORTING REQUIREMENTS
1. Entities Obligated to Report: Corporations, limited liability companies (LLCs), and similar entities established in the United States or authorized to conduct business in the U.S.
2. Exemptions: Specific entities, such as publicly traded companies, banks, credit unions,
insurance companies, and those already under substantial federal or state regulation.
3. Information Required: Entities must provide the following information for each beneficial owner:
– Full legal name;
– Date of birth;
– Residential or business street address;
– Unique identifying number from an acceptable identification document (e.g., passport or driver’s
license) and the issuing jurisdiction.
(Note: Beneficial owners are individuals who directly or indirectly have significant control over the entity or own or control at least 25% of the ownership interests.)
4. Reporting Individual: The same details are required for the individual submitting the report on behalf of the entity.
5. Deadlines for Filing:
– For existing entities, the deadline for filing their initial reports is generally January 1, 2025;
– Entities must update their reports within 30 days of any changes in beneficial ownership information.
6. Penalties for Non-Compliance:
– Entities that fail to report accurate information or update their reports in a timely manner may incur civil penalties, and in certain cases, criminal penalties.
Entities are advised to consult with legal or compliance professionals to fully understand the implications of the new regulations and develop effective compliance strategies. These measures are designed to enhance transparency in company ownership, thereby strengthening the U.S. government’s ability to thwart and uncover financial crimes.
