The Corporate Transparency Act (CTA), enacted in January 2021, has reshaped Beneficial Ownership Declaration requirements in the United States, with full implementation scheduled by 2024. The law mandates that certain U.S.-based business entities report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN)
What Has Changed?
Mandatory Reporting:
- Limited Liability Companies (LLCs), corporations, and similar entities must disclose their beneficial owners to FinCEN.
Definition of Beneficial Owner:
- Any person holding at least 25% ownership or exercising substantial control over the company.
Required Information:
- Full legal name
- Date of birth
- Current residential address
- Identification number (e.g., passport, driver’s license)
Notable Exemptions:
- Publicly traded companies (Publicly traded companies are exempt from the Beneficial Ownership Declaration requirement of the Corporate Transparency Act (CTA) because they are already subject to extensive regulatory oversight and transparency rules enforced by U.S. government agencies.)
- Banks and credit unions (Banks are exempt from the Beneficial Ownership Declaration requirement under the Corporate Transparency Act (CTA) because they are already subject to stringent regulatory oversight through other U.S. financial laws.)
- Non-profit organizations (Non-profit organizations are exempt from the Beneficial Ownership Declaration requirement of the Corporate Transparency Act (CTA) due to their unique legal and operational structures, which prioritize transparency and public accountability)
Penalties for Non-Compliance:
- Fines up to $10,000
- Imprisonment up to 2 years for willful failure to report or providing false information.
When to File?
- New Entities (created after January 1, 2024): Must file within 30 days of incorporation.
- Existing Entities (formed before 2024): Must file before January 2025
