The Corporate Transparency Act (CTA), enacted by Congress on January 1, 2021, as part of the National Defense Authorization Act, marks a significant shift in the landscape of business reporting in the United States. This legislation, aimed at preventing and combating money laundering, terrorist financing, corruption, and tax fraud, introduces beneficial ownership reporting requirements for corporations, limited liability companies, and similar entities formed or registered to do business in the U.S.<\/p>\n\n\n\n
Who is Affected? Reporting Requirements In addition to Beneficial Owners, Company Applicants must also be reported. These are individuals who, after January 1, 2024, directly submitted the formation or registration document for a company, or were primarily responsible for that submission. There may be up to two Company Applicants.<\/p>\n\n\n\n
<\/strong>The CTA primarily affects active corporations, LLCs, and other businesses formed by filing a document with a Secretary of State\u2019s office in the United States. However, certain entities are exempt from reporting, including publicly traded companies, banks and other financial institutions, tax-exempt nonprofits, public utilities, and some large businesses. These entities are already subject to regulatory requirements.<\/p>\n\n\n\n
<\/strong>Under the CTA, reporting companies are required to submit beneficial ownership reports to the Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of Treasury. A Beneficial Owner is defined as any individual who either exercises substantial control over a company or owns or controls at least 25% of the ownership interest. If a business entity owns or controls at least 25% of a reporting company, then its Beneficial Owner(s) must also be reported.<\/p>\n\n\n\n