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A Not So Gentle Reminder Deadline Approaching for Corporate Transparency Act

Nov 14, 2024

This is a reminder that we previously notified members of the upcoming deadline for complying with a new regulation on financial disclosure. That deadline is fast approaching. If your company is organized as a Limited Liability Company or a Partnership, you have until January 1, 2025, to comply with the Corporate Transparency Act (CTA).

 

The CTA requires certain domestic entities to submit a declaration of ownership with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCen).

 

There are types of entities exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies. FinCEN’s Small Entity Compliance Guide includes a table and checklists for each of the 23 exemptions that may help determine whether a company meets an exemption. Companies should carefully review the qualifying criteria before concluding that they are exempt.

 

What is the purpose of this Regulation?

The purpose of the CTA and its reporting mandate is to combat money laundering, terrorism financing, organized crime, and other financial crimes by requiring many corporations, limited liability companies (LLCs), and other entities formed or registered in the U.S. to report information about their beneficial owners and company applicants to FinCEN.

 

 

Who is Required to Report?

Any entity that is a corporation, a LLC, a limited partnership or an entity created by filing with a Secretary of State or any similar office under the law of a State or Indian tribe is required to comply with the Reporting Rule.

 

What is Required to Report?

  • The business’s legal name and any trade names or “doing business as” (DBA) names.
  • The current street address of its principal place of business in the U.S.
  • Its jurisdiction of formation or registration.
  • Its taxpayer identification number.
  • The name, date of birth, and address of all beneficial owners of the company.
  • A unique identifying number from an acceptable identification document, such as a driver’s license issued by a U.S. state or passport. The company must also submit an image of the identification document to FinCEN.

 

What if I don’t Report or Miss the Deadline?

Purposeful violations may lead to civil or criminal penalties, including up to two years in prison. However, FinCEN stated that it “intends to prioritize education and outreach to ensure that all reporting companies and individuals are aware of and on notice regarding their reporting obligations.”

 

Go to FinCEN.gov/BOI for more information. It provides:

 

Be advised that FinCEN has been notified of fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act. The fraudulent correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages, or click on any links or scan any QR codes within them.

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