Did You Know About the Corporate Transparency Act and that you may be Required to File a Report?

In January 2021, the United States Congress passed the Corporate Transparency Act (“CTA”) as part of the Anti-Money Laundering Act of 2020. This law, while intended to prevent criminal actors from hiding and laundering money through shell companies, has significant implications for many corporations and small businesses. Under the CTA, many corporations will be required to identify to the U.S. Treasury’s Financial Crimes Enforcement Network (“FinCEN”) information about the company, including its beneficial owners (which includes senior officers, important decision makers, and anyone who owns or controls 25% or more of the company), and company applicants. While most financial institutions generally already required these types of disclosures, companies did not have to provide all of this information to the federal government in the past. The reporting requirement of the beneficial ownership information (“BOI”) to FinCEN through an online filing, begins on January 1, 2024. With this date quickly approaching, now is the time to prepare for this filing to avoid penalties. Companies required to report are called reporting companies. There are two types of reporting companies. Domestic Reporting Companies are entities that are formed by the filing of a document with a secretary of state or similar state office. They include Corporations; Limited Liability Companies; Limited Liability Partnerships; Limited Liability Limited Partnerships; Business Trusts; and Most Limited Partnerships. Then there are Foreign Reporting Companies, and they are entities that are formed under the laws of a foreign jurisdiction and then registered to do business in any U.S. state by the filing of a document with a secretary of state or similar office (including corporations, limited liability companies, or other entity formed under the law of a foreign country).