On January 1, 2024, the new reporting requirements under the Corporate Transparency Act (the “CTA”) took effect in the United States. The CTA, aimed at increasing corporate transparency and combating financial crimes, requires “reporting companies” to file Beneficial Ownership Information Reports (“BOIRs”) with the Financial Crimes Enforcement Network (“FinCEN”), disclosing certain beneficial ownership information. This requirement applies to most domestic and foreign entities doing business in the U.S., including limited liability companies, limited partnerships, corporations, and similar structures (each a “Reporting Company”).

The CTA provides for 23 exemptions from the definition of Reporting Company, which largely apply to entities that are already subject to substantial regulation and reporting obligations. Companies urgently need to assess whether each entity in its corporate structure qualifies for one of the exemptions or meets the definition of Reporting Company to determine the extent of their filing requirements. For a discussion on exemptions under the CTA, see: The Corporate Transparency Act (Part 2).

Filing Deadline for Reporting Companies Formed or Registered Prior to January 1, 2024

Reporting Companies formed or registered to do business in the United States prior to January 1, 2024, are required to submit initial BOIRs to FinCEN no later than January 1, 2025.

With less than three months remaining until the end-of-year deadline, we strongly advise taking immediate action to ensure compliance. The reporting process can be complex and time-consuming, especially for companies with complex ownership structures. Reporting Companies should begin collecting the necessary information on the company and its beneficial owners well in advance of the deadline to avoid delays.

Looking Ahead

While existing entities have until the end of 2024 to file, Reporting Companies that were or will be formed or registered between January 1, 2024, and December 31, 2024, must file within 90 days of formation or registration. If a Reporting Company existed or was registered at any point during 2024, it must file a BOIR, even if the entity is dissolved or withdrew its registration before its BOIR came due.

Going forward, Reporting Companies formed or registered on or after January 1, 2025, must file within 30 days of formation or registration.

In any event, any change or update to a previously submitted BOIR must be filed within 30 days after the date of the change or update occurs.

Prepare for Filing

Failure to comply with the CTA’s reporting requirements can result in significant penalties, including civil fines and potential criminal charges, so it is crucial to begin preparing to submit your filings now. Understanding the CTA’s obligations is key to avoiding potential penalties. A detailed analysis of the CTA’s reporting requirements is available here: The Corporate Transparency Act (Parts 1-4). FinCEN has provided official reference materials, which can be accessed through FinCEN’s website. We recommend reviewing the Small Entity Compliance Guide and FinCEN’s FAQs.

Given the complexity of the CTA’s requirements, it is advisable to consult with legal counsel experienced in the CTA’s compliance matters.