Navigating the Corporate Transparency Act: What You Need to Know
As our ongoing commitment to keeping you informed about critical regulatory updates that may affect your business, we wanted to share details regarding the Corporate Transparency Act (CTA).
The CTA, which became effective on January 1st, 2024, represents a significant development in efforts to combat money laundering and other illicit financial activities, aiming to enhance transparency and accountability in corporate ownership structures. At its core, it’s intended to make it harder for criminals to hide behind anonymous shell companies.
I've outlined key points about the CTA and its potential impact on your business:
1. Reporting Requirements: Covered entities, including corporations, limited liability companies (LLCs), and similar entities, are required to disclose the Financial Crimes Enforcement Network (FinCEN)information about individuals who directly or indirectly own 25% or more of ownership interests and those who exercise substantial control over the entity.
2. Information to be disclosed:
Business:
- Legal business name and all DBA names
- Physical address (not a P.O. box)
- State of formation
- Tax identification number (those businesses without one will need to obtain a unique identification number)
- Copy of an identifying document such as Articles of Incorporation or Organization
Beneficial owner:
- Full legal name
- Date of birth
- Home address (no P.O. boxes)
- Copy of government-issued photo ID (such as a driver’s license or passport)
3. Exemptions: Some entities, such as publicly traded companies and certain regulated entities, are exempt from the reporting requirements.
4. Reporting timeline: Applicable entities created in 2024 have 90 days from creation to file the report. Entities created prior to 2024 have until December 31, 2024, to file. After 2024, new entities will have 30 days to file the report.
5. Compliance Measures: It's crucial for affected businesses to conduct thorough due diligence, implement internal controls, and seek legal guidance to ensure compliance with the CTA.
6. Additional Resources: You can refer to the following link: https://www.fincen.gov/boi-faqs
We recommend reviewing your current corporate governance structures and compliance protocols to assess any potential impact of the CTA on your operations. Should you have any questions or require assistance, please do not hesitate to reach out to us. We are committed to providing the necessary resources and expertise to help you address these requirements effectively.
