The Corporate Transparency Act 2024: Beneficial Ownership Reporting

As of January 1, 2024, significant changes are underway for businesses across the United States with the implementation of the Corporate Transparency Act (CTA) overlooked by FinCEN. This legislation mandates BOI reporting requirements for nearly all legal entities operating within the country. 

Aimed at strengthening national security and combatting financial crimes such as money laundering and terrorism financing, the CTA represents a pivotal shift in transparency regulations. With a focus on beneficial ownership disclosure and compliance, businesses must comply to a set of new rules and obligations. 

Here we’ll deliver an overview of the CTA new rules, including its scope, exemptions, reporting requirements, and implications for businesses. Understanding these is necessary for businesses to ensure compliance and mitigate potential risks associated with non-compliance.  

• Mandatory Reporting: Starting January 1, 2024, almost all legal entities, including limited liability companies and domestic reporting companies, are required to disclose ownership information, such as beneficial owners and senior officers, to FinCEN under the Corporate Transparency Act (CTA). This reporting aims to combat criminal activities like money laundering and terrorism financing. 

• Deadlines: If your company is established or registered in 2024, you must report BOI within 90 calendar days after receiving actual notice or public notice that your company's creation or registration is effective, whichever occurs earlier. Reporting companies established or registered before January 1, 2024, will be granted an extension until January 1, 2025, to submit their initial BOI reports. If your company is established or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual notice or public notice confirming its creation or registration. 

• Exemptions and Penalties: Certain entities, like public companies and those with over 20 employees and specific revenue thresholds, are exempt from reporting. Failure to comply or providing false information can result in civil penalties of up to $500 per day, along with potential criminal penalties of fines or jail time. 

• Disclosure Details: Reporting companies must provide business information, including entity names, addresses, taxpayer identification numbers, and details of beneficial owners, such as names, addresses, and substantial control indicators. Updates to this information must be made within 30 calendar days. The collected data is accessible to select government agencies for law enforcement and national security purposes, but not to the public. 

The Corporate Transparency Act New Rules: Effective January 1, 2024 

It's important to note that this overview provides a general understanding of the CTA's new provisions.  

Given the complexity of the legislation and its potential implications for businesses, it is advisable for entity owners to seek direct professional guidance from law firms or business management experts, such as those in accounting firms, to ensure compliance with the latest regulations and requirements. 

Mandatory Reporting Under the Corporate Transparency Act (CTA) 

The Corporate Transparency Act (CTA), effective as of January 1, 2024, mandates that virtually all legal entities incorporated, organized, or registered to conduct business in a state disclose information regarding their owners, officers, and controlling individuals to the Financial Crimes Enforcement Network (FinCEN). 

This bipartisan initiative aims to combat terrorist financing, money laundering, and other illicit activities. While the law is designed to enhance transparency, it poses significant challenges for private funds, family offices, and angel investors accustomed to maintaining privacy in their investments. Entities falling under the definition of a "reporting company" must comply with the CTA within either 30 days or one year, depending on their date of formation. 

Scope of Reporting Companies and Exemptions 

Under the CTA, reporting companies encompass both domestic and foreign privately held entities (including newly developed startups), excluding 23 specific entity types such as SEC-reporting companies and tax-exempt entities.