The Corporate Transparency Act (CTA) establishes new reporting guidelines for corporations and organizations domiciled in the U.S. The Act, which went into effect on January 1, 2024, requires businesses to report personal information on owners to the federal government.

The Corporate Transparency Act was designed to combat illicit activity that was being shielded from public view by corporate holdings. The goal of the Act was to shine a spotlight on beneficial owners, and help identify individuals that may be involved in money laundering, tax fraud, and terrorism financing by requiring disclosure of owners for specific types of businesses.

Companies and organizations required to comply with the Corporate Transparency Act must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network, more commonly known as FinCEN.

The BOI Reports required under the Corporate Transparency Act must identify individuals that either 1) have a major influence on the company’s operations, 2) owns at least 25% of outstanding shares, or 3) has a significant level of control over the company’s equity.

Domestic reporting companies, including corporations, LLCs, and other entities form through a filing with a secretary of state or comparable office in the U.S. are subject to reporting. In addition, foreign companies that are registered to conduct business in the U.S. through filing with a secretary of state or similar office will also be required to file.

As a result, the Corporate Transparency Act applies to millions of companies, including small business owners, LLC members, partnerships, and other stakeholders not covered by other FinCEN compliance rules.

Specific information that must be submitted includes personal information, such as names, addresses, birthdates, and identification numbers, such as a driver’s license or passport.

While companies may opt to file their own BOI reports, a trusted attorney who is experienced in these types of filings can help you comply with the Corporate Transparency Act. Klinedinst attorneys, who are registered with FinCEN, can file the initial report, as well as updated reports to ensure timely completion. An experienced attorney can also help ensure all of FinCEN’s standards are met.

Klinedinst’s Corporate and Transactional Group has prepared a special report for clients on the Corporate Transparency Act. To request a copy of the PDF, please click here or call (619) 400-8000 and ask to speak to a member of our Corporate and Transactional Group.