Attention All Entities Formed Under State Law.
Question: What does your business have to do with financial fraud and money laundering?
Answer: The Corporate Transparency Act.
To combat money laundering and to identify hidden ownership, U.S. Congress recently passed the Corporate Transparency Act. In a nutshell, it’s a result of numerous issues, including increased awareness of financial fraud, improper use of corporate structures, and overwhelming international pressure in 2020.
It’s a big deal. And to ensure its implementation, Congress even overrode a presidential veto.
Surprisingly, before passage, America was one of the only developed nations not to have some kind of mandatory disclosure of ownership in entities. Let’s take a deeper look at what this new regulatory framework entails.
Who Has to Comply with the Corporate Transparency Act?
All entities formed under state law must comply. More specifically, entities formed after January 1, 2024 that meet certain broad criteria and are not exempted are required to file a report with a division of the U. S. Treasury, the Financial Crimes Enforcement Network (FINCEN).
That report must disclose the entity’s actual and beneficial owners within 30 days after its formation.
For entities formed before January 1, 2024, compliance must be achieved before January 1, 2025.
What Information is Required?
As of now, the information required includes the entity name along with the following identifying information about the people who control it (directly or indirectly):
- names
- birthdates
- addresses
It’s important to note, however, that neither the form for reporting the information nor implementing regulations have been finalized.
What Happens if You Don’t File?
Failing to file is not an option. The penalties for not filing are substantial: $500 for each day and fines of not more than $10,000 or 2 years’ imprisonment.
McMillan Metro Faerber Can Help
As the United States government continues to update the requirements, we at McMillan Metro Faerber, P.C. can provide guidance and direction to clients affected by the Corporate Transparency Act, and we will continue to monitor developing regulations concerning it. Contact us if you have any questions as you prepare for compliance with this new law.
