Unveiling the Corporate Veil: A Comprehensive Guide to the Corporate Transparency Act

On January 1, 2021, Congress enacted the Corporate Transparency Act (“CTA”) as part of the Anti-Money Laundering Act of 2020 in the National Defense Authorization Act for Fiscal Year 2021. 

The CTA aims to create a centralized beneficial ownership registry by mandating certain businesses to disclose critical ownership information. On September 29, 2022, the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a final rule (“Final Rule”) for the CTA, which outlines specific requirements for companies reporting beneficial ownership information (“BOI”). On November 8, 2023, FinCEN published another final rule that provides the criteria certain companies must meet in order to report an intermediate entity’s FinCEN identifier (as discussed below) in place of BOI. That final rule can be found here. Additionally, on November 30, 2023, FinCEN published another final rule that extends the filing deadline for certain BOI reports. That final rule can be found here. All reporting requirements under the CTA will become effective on January 1, 2024. FinCEN published a Small Entity Compliance Guide to help small businesses comply with the CTA’s beneficial ownership reporting requirements, which can be found here, and FinCEN’s updated Frequently Asked Questions can be found here. Additionally, the New York legislature has passed CTA-equivalent legislation that, if signed by the Governor into law, could add additional reporting requirements.¹ The requirements addressed below should be reviewed in connection with the most recent guidance released from FinCEN and applicable state law. 

The CTA emerged in response to mounting concerns about the misuse of corporate structures for nefarious purposes, including money laundering, terrorism, tax evasion, fraud, and other criminal activities. To combat these concerns, it aims to ensure that the true beneficial owners of companies are identified and reported. To that end, the CTA requires certain companies, called “reporting companies,” to file a report that identifies two categories of individuals: (i) the reporting company’s beneficial owners and (ii) the reporting company’s company applicant(s). This White Paper provides an overview of which entities are required to provide reports, which are exempt, what information entities are required to report, the timeline for compliance, and the penalties for non-compliance. 

Download the White Paper here. 

[1] The New York legislature has passed a state-level CTA equivalent act. The bill that has passed both houses, but has not yet been signed into law can be found here.