In January, Congress enacted the 2021 National Defense Authorization Act. It includes amendments to the U.S. Anti-Money Laundering Act, the most noteworthy of which is the Corporate Transparency Act (CTA). (JDSupra, March 22, 2021)
The most significant elements of the CTA to know now:
- CTA legislation requires “beneficial” business owners to report specific information to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). A beneficial owner directly or indirectly controls at least 25 percent of the company. Beneficial owners must report their full name, date of birth, current address, and unique identification number. This information will help prevent the formation of shell companies and money laundering as well as terrorist organization funding.
- Unless exempt, all privately held businesses in the U.S. are subject to the CTA reporting requirements.
- CTA becomes effective 1 January 2022. Businesses formed after that time must submit reports within two years. All business changes are required to be reported within one year.
- Businesses should add beneficial owner information collection into their operations especially when there are multiple qualifying beneficial owners, as reporting/update deadlines can be cumbersome.
- Failure to report or update beneficial owner information may include civil penalties up to $500 per day until the violation is corrected as well as criminal fines up to $10,000 and imprisonment for up to two years. (ibid)
The good news is that business entities have almost a full year to get their CTA reporting controls in place, to meet the 1 January 2022 effective date.
Have some CTA regulation reporting questions? Give us a call.