The law requires corporations and LLCs to file beneficial ownership information with FinCEN
Small businesses in the U.S. and abroad are facing additional compliance challenges in the wake of new details published last month about pending obligations under the Corporate Transparency Act (CTA), which requires business entities to file a beneficial ownership information report with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The latest installment of Wolters Kluwer CT Corporation’s Expert Insights podcast breaks down many of the parameters outlined in FinCEN’s final rule, including the types of entities that fall under the CTA’s mandate, the kind of information they have to report, and timetables for compliance.
Sandra Feldman, Publications Attorney at Wolters Kluwer CT Corporation, explains that the CTA was designed to help law enforcement crack down on money laundering and other illicit activity inside the U.S. financial system. FinCEN estimates that 32.6 million entities – or “reporting companies” under the CTA – will fall under the purview of the rule once it goes into effect on January 1, 2024, with an additional 5 million companies added each year. Companies founded prior to that date will have until January 1, 2025 to file their initial beneficial ownership information report, while new entities will be required to file a report within 30 days of receiving notice of their creation or registration.
“When you take into account the various exemptions in place, this is really a reporting requirement on small businesses,” Feldman said.
The CT Expert Insights podcast examines topics related to business licensing requirements and other developments that are of importance to corporations, LLCs and small businesses. Previous installments have explored the popularity of holding company structures, the pros and cons of S Corporation status and compliance challenges in the pharmaceutical industry.