On January 1, 2021, Congress enacted the Corporate Transparency Act (the “CTA”) as part of the Anti-Money Laundering Act of 2020 in the National Defense Authorization Act for Fiscal Year 2021. Congress passed this as an attempt to better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity.
The CTA requires a range of entities to file a report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) identifying the entities’ beneficial owners – the persons who ultimately own or control the company – and provide similar identifying information about the persons who formed the entity. The reporting rule goes into effect on January 1, 2024.
Who is Required to Report?
Any entity that is a corporation, a limited liability company (“LLC”), or any entity created by filing with a Secretary of State or any similar office under the law of a State or Indian tribe will be required to comply with the CTA. In addition, any corporation, LLC, or other entity that is formed under the laws of a foreign country and is registered to do business in any State or tribal jurisdiction is also subject to the CTA.
Accordingly, the rule requires the following types of entities to file reports unless it falls within an exemption (each, a “Reporting Company”):
- U.S. corporations;
- U.S. LLCs;
- Other similar U.S. entities, such as limited partnerships and business trusts/statutory trusts; and
- Non-U.S. corporations, LLCs and other similar entities that are registered to do business in the United States.