The Corporate Transparency Act is a piece of legislation designed to enhance corporate transparency and combat money laundering, tax evasion, and other financial crimes. It primarily targets beneficial ownership information, which refers to the individuals or entities that ultimately own or control a company, often hidden behind layers of anonymity in shell companies.
Key provisions of the Corporate Transparency Act include:
- Beneficial Ownership Reporting: Companies, including corporations, LLCs, and similar entities, are required to report information about their beneficial owners to FinCEN. This information includes the names, addresses, dates of birth, and identification numbers (such as Social Security numbers) of the beneficial owners.
- Reporting Requirements: Companies formed or registered after 01/01/2024 will be required to provide this information within 90 days of formation or registration. Existing companies will have to report this information until 01/01/2025.
- Access to Information: Law enforcement agencies, certain government agencies, and financial institutions will have access to the beneficial ownership information in order to verify the identities of those involved in corporate entities.
- Penalties for Non-Compliance: Failure to comply with the reporting requirements or providing false information can result in civil and criminal penalties.
- Privacy and Security Protections: The CTA includes provisions to protect the privacy and security of the reported information, including restrictions on public disclosure and safeguards against unauthorized access.
- Exemptions: Some entities, such as publicly traded companies or certain financial institutions may be exempt from reporting beneficial ownership information
