Corporate Transparency Act Regulation Requirements

We want to bring the Corporate Transparency Act (CTA) to your attention, a significant regulation that could impact your business. It’s crucial to review this as substantial penalties for non-compliance affect corporations and LLC owners (including real estate holding or small LLCs), among others.

Effective January 1, 2024, the CTA requires certain companies to report their beneficial ownership information to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). This law aims to boost transparency and combat financial crimes like money laundering.

Key Points:

• Affected Entities: The CTA primarily affects corporations, LLCs, and similar entities formed under state law.
• Reporting Requirements: Companies must report details of beneficial owners (individuals with at least 25% ownership or substantial control).
• Exemptions: Publicly traded companies, non-profits, and entities with substantial employee numbers or activities are exempt.
• Compliance Penalties: Non-compliance can lead to civil and criminal penalties, including fines of $500 per day and criminal penalties of up to $10,000.
• Action Required: Review the Key Compliance Steps below for detailed information.

We are here to assist you through this process. We’ll keep you updated over the next few months while we’re still determining our approach and pricing.

Key Compliance Steps:

1. Determine Reporting Obligation:

• Existing Companies: File the initial report by 12/31/24
• New Entities: File within 90 days from creation or registration

2. Identify Beneficial Owners:

• Individuals with substantial control or owning at least 25%.

3. Prepare Necessary Information:

• Collect details like names, dates of birth, residential addresses, and identifying numbers

4. Submit Report to FinCEN:

• Electronically through FinCEN’s secure filing system

5. Understand Exemptions:

• Review specific exemptions carefully to determine eligibility

6. Update and Correct Reports:

• Update information within 30 days of changes; correct inaccuracies promptly

7. Compliance and Enforcement:

• Civil and criminal penalties for non-compliance; a 90-day grace period for corrections

8. Use of Third-Party Service Providers:

• Consider using third-party services to assist with report submission

9. FinCEN Identifier:

• Request a unique FinCEN identifier for reporting purposes, if needed