The Corporate Transparency Act (CTA) created requirements for companies in the US to file information about their entities and Beneficial Owners to FinCEN. The Financial Crimes Enforcement Network (FinCEN) is responsible for combating financial crimes in the US. Because it hasn't come into effect, the details may change slightly, particularly in exactly how companies can file.
Starting January 1, 2024, all new companies must file information with FinCEN within 90 days of formation. Companies formed before January 1, 2024 have one year to file with FinCEN (until January 1, 2025).
The law applies to most companies in the US, with some important exemptions.
Each company needs to file information about itself:
Each company also needs to file information about every Beneficial Owner (you may see this described as Beneficial Owner Information, BOI):
Any person who either:
Also, anyone who actually files the documents that created the company, such as their lawyer or the lawyer’s paralegal or other staff (the “Company Applicant”), must also have their information reported with the initial filing.
An individual may file a report on behalf of a reporting company, but the reporting company is “ultimately responsible” for the filing, and liability lies with the actual people listed on the filing. The penalties are steep: civil penalties up to $10,000, and criminal penalties up to 3 years in jail.
The stated purpose of the law is to prevent illicit actors from using shell and front companies to hide their identities and launder money, which helps counter terrorism, for example.
There are more than 20 types of companies exempt from the CTA, mainly companies that already provide Beneficial Ownership Information in some other capacity, or highly regulated companies, like banks, insurance companies, and tax-exempt entities.
Importantly, “Large Operating Companies” are also exempt. Large Operating Companies:
If any of the previously provided information changes (except for the Company Applicant’s information), the company must file an updated report within 30 days.
If you want to read the actual rules and guidance directly from FinCEN, you can do so here.
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