Corporate Transparency Act Compliance: Beneficial Ownership Reporting, Filing Requirements and Exceptions

The CTA requires certain U.S. and foreign entities that are defined as reporting companies to report beneficial owners and company applicants to FinCEN (the Department of the Treasury's Financial Crimes Enforcement Network). FinCEN will establish and maintain a non-public national registry of beneficial owners and company applicants of reporting companies to prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity.

These first-ever federal and new reporting rules will impact millions of reporting companies formed prior to and after the effective date of the CTA. Noncompliance with these reporting rules may result in significant civil and criminal penalties.

Therefore, it is important that entities that are potentially impacted by these rules commence to determine (1) whether a business arrangement or entity is out of scope as a reporting company, a reporting company, or otherwise exempt from reporting; (2) who is a beneficial owner and a company applicant; (3) how trusts are treated under the CTA; (4) the information that is required to be reported by a reporting company, beneficial owner, and company applicant; (5) the necessary due diligence that a reporting company must undertake to file a true, correct, and complete report; (6) when a report is initially due, required to be updated, or required to be corrected; (7) the potential ramifications of noncompliance; and (8) and how to establish a workstream to initially prepare for, collect, maintain, and report information required to be reported under the CTA.

Listen as our panel discusses the CTA's key provisions, determining whether companies are reporting companies or beneficial owners, and applying both civil and criminal penalties for noncompliance.