With the Corporate Transparency Act (CTA) now in effect, the rubber has hit the road for corporate counsel seeking to evaluate their clients’ responsibilities and filing requirements. Adopted as part of the William M. Thornberry National Defense Authorization Act for Fiscal Year 2021, the CTA requires many U.S. businesses and foreign companies registered to do business in the U.S. to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of Treasury. These reports will be aggregated into a database to be used by U.S. law enforcement agencies in combatting money laundering and other illicit activity currently obscured through the opacity of business entities.
The CTA, which took effect Jan. 1, 2024, has created significant new workflow for companies and the counsel who advise them. All domestic companies and foreign companies registered to do business in the U.S. are now generally required to report beneficial ownership information (BOI) unless one of a list of enumerated exemptions applies. BOI reporting requirements encompass any individual who exercises “substantial control” over the company, or who owns or controls at least 25% of the ownership interests of such reporting company.
