For those of you who own or have ownership interests in a company that is formed or registered to do business in the United States, hopefully you are already aware of the very important requirements of the US Corporate Transparency Act (CTA).
The CTA came into force in the United States on 1 January 2024. The CTA introduced new anti-money laundering laws, intended to help prevent and combat money laundering, terrorist financing, corruption and tax fraud.
The key requirement on companies and owners of beneficial interests in them is the necessity of filing with the Financial Crimes Enforcement Network (FinCEN), a bureau within the US Department of Treasury, reports of all beneficial ownership interests in the company. The requirements go well beyond standard “know your client” measures.
Business entities formed prior to 1 January 2024 have until 1 January 2025 to comply with the CTA’s reporting requirements. Any US reporting company formed during 2024 must file a Beneficial Ownership Information report (BOI report) within 90 calendar days of its formation. Reporting companies formed on or after 1 January 2025 will have 30 calendar days to file their initial BOI reports.
Changes in beneficial ownership interests in reporting entities must also be notified to FinCEN.
Companies formed outside of the US but registered to do business in the US may be caught by the reporting obligations unless they come within one of the 23 categories of entities that are exempt from reporting. Many of the exempt categories are already subject to similar reporting obligations under other anti-money laundering legislation. Companies that qualify as a “large operating company” may also be exempt from the reporting obligations.
For entities subject to the CTA, reporting obligations and associated requirements can be complex. Penalties for breach of the CTA are very substantial.
If you have an interest in a company formed in or registered to do business in the United States and you are not certain that it has complied with its CTA reporting obligations, we strongly recommend that you seek legal advice as soon as possible.
For further information please contact Brett Cowell in our Corporate & Commercial Team.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.