The Corporate Transparency Act (CTA), included as an amendment to the Anti-Money Laundering Act of 2020, was passed by Congress this year as an effort to make it more difficult to commit “shell company” money laundering, tax fraud, and other financial crimes. The CTA requires the annual disclosure of information regarding beneficial owners of U.S. companies to the Financial Crimes Enforcement Network (FinCEN).
The CTA defines a beneficial owner as an individual who exercises substantial control over the entity either directly or indirectly (through any contract, arrangement, understanding, relationship, or otherwise), or an individual who owns or controls not less than twenty-five percent of the ownership interests of the entity. The information to be reported will include the individual’s full legal name, date of birth, current residential or business street address, and a unique identifying number from an acceptable identification document or the individual’s FinCEN identifier.
With certain exemptions, the CTA applies to all corporations, limited liability companies, or other entities that are formed or registered to do business in the United States. Unless an entity is exempted under the CTA, failure to report to FinCEN can result in daily civil penalties and potential criminal exposure. Entities exempted by the CTA include:
Publicly traded companies, nonprofit organizations, or heavily regulated companies
Most financial service, investment, accounting, and banking...
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