Corporate Transparency Act – Part 1
In 2019, the Corporate Transparency Act was passed into legislation as part of the National Defense Authorization Act. The Act addresses issues related to money laundering, terrorism financing, and other illicit financial activities by increasing transparency about the beneficial ownership of legal entities such as corporations and LLCs.
Key Provisions of the Act:
- Beneficial Ownership Reporting: The act requires certain companies to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Beneficial owners are individuals who directly or indirectly control or own a significant portion of the company. Every corporation, LLC, or other entity created by the filing of a document with the Secretary of State, or similar office, is required to file a Beneficial Ownership Report.
- Reporting Requirements: Companies covered by the act are required to report information about each beneficial owner, including their full legal name, date of birth, current address, and a unique identification number. Companies must also report any change in ownership.
- FinCEN Database: The collected information is maintained in a confidential database accessible to law enforcement agencies and financial institutions for anti-money laundering and counter-terrorism financing efforts.
- Exemptions and Thresholds: Some entities are exempt from reporting requirements, such as publicly traded companies and entities already subject to comprehensive reporting and disclosure requirements, like banks and other financial institutions.
It is imperative that you choose a service company that is well-versed in the Corporate Transparency Act to ensure your project doesn’t meet unexpected delays.