Corporate Transparency Act

As part of the National Defense Authorization Act dated 1/1/2021, the CTA was enacted. In short, the intent of the CTA was passed to enhance transparency in entity structures and ownership to combat money laundering, tax fraud, and other illicit activities. It is designed to capture more information about the ownership of specific entities operating in or accessing the U.S. market. The Corporate Transparency Act is designed to improve business activity transparency through the reporting of Beneficial Ownership Information (BOI) and is particularly targeted to these smaller businesses. (1) The CTA will go into effect 30 days from the creation date for businesses that are created after 1/1/2024. Companies created prior to 1/1/2024 have until 1/1/2025 to complete the registration process. Companies are required to register with FinCEN. Once registered, a company has 30 days to submit any changes to beneficial ownership, including correcting mistakes. There are 23 exemptions but these are mainly businesses that are already subject to some other type of anti-laundering regulation. And of course, penalties for failure to file range from $500/day of violation up to $10,000 and possible criminal penalties.

More information can be found at www.fincen.gov/boi.

(1) https://tax.thomsonreuters.com/blog/are-you-ready-the-corporate-transparency-act-becomes-effective-jan-1-2024/