As part of the Anti-Money Laundering Act of 2020, the U.S. Treasury Financial Crimes Enforcement Network (FinCEN) was authorized to collect beneficial ownership information and establish reporting requirements for certain corporations, limited liability companies, and similar entities created in or registered to do business in the U.S.
Regulations were released on September 29, 2022 that go into effect on January 1, 2024.
Corporate Transparency Act Reporting Requirements
- Beneficial owner information – Individual’s full legal name, date of birth, current residential or business street address and unique identifying number from an acceptable identification document (e.g., passport) or the individual’s FinCEN identifier
- Company applicant
- Includes any individual who, directly or indirectly, either (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25% of the ownership interests of a reporting company.
- In defining who has substantial control, the rule sets forth a range of activities that could constitute substantial control of a reporting company. This list captures anyone who is able to make important decisions on behalf of the entity.
- The rules provide standards and mechanisms for determining whether an individual owns or controls 25% of the ownership interests of a reporting company.
- The individual who directly files the document that creates the entity, or in the case of a foreign reporting company, the document that first registers the entity to do business in the U.S.
- The individual who is primarily responsible for directing or controlling the filing of the relevant document by another.
- Entities that are existing or registered at the time of the effective date of the rule are not required to identify and report on their company applicants.
Certain entities are exempt from these reporting requirements and include:
- Securities issuers
- Domestic governmental authorities
- Domestic credit unions
- Depository institution holding companies
- Money transmitting businesses
- Securities broker-dealers
- Securities exchange or clearing agencies other Securities Exchange Act of 1934 entities
- Registered investment companies and advisers
- Venture capital fund advisers
- Insurance companies
- State licensed insurance producers
- Commodity Exchange Act registered entities
- Accounting firms
- Public utilities
- Financial market utilities
- Pooled investment vehicles
- Tax exempt entities
- Entities assisting tax exempt entities and subsidiaries of certain exempt entities
- Inactive businesses
- Large operating companies defined as an entity:
- Employing more than 20 full-time employees
- Filed tax returns for the prior year demonstrating more than $5 million in gross receipts or sales (excluding sales outside the U.S.)
- Have an operating presence at a physical office within the U.S.
Newly Created or Registered Entities
With respect to newly created entities, the initial report is due within 30 days of the reporting company’s creation or registration.
Companies that exist at the time of the effective date of new rules must submit an initial report within one year of the effective date, by January 1, 2025.
Change in Information Previously Reported
Updated reporting is required within 30 days when there is a change in the information previously provided, the entity becomes exempt, or inaccuracies in previous reporting are discovered.
Continue the Conversation
If you’d like to learn more about the Corporate Transparency Act reporting requirements, please reach out. Detailed information regarding the new rules can be found here.