It’s not often that federal legislation rocks the entrepreneurial world, but that’s what happened on January 1, 2021. Congress enacted the Corporate Transparency Act (“CTA”), expanding upon already existing anti-money laundering laws. The purpose of the CTA is to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity by allowing law enforcement access to beneficial ownership information during investigations of entities believed to be used for illegal purposes.
Under the CTA, most existing and newly formed corporate entities will be required to file information about the corporate entity, its beneficial owner(s), and the individual who formed the entity with the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”).
CTA Key Takeaways:
What can you do now? Start identifying all business entities over which you have substantial control and/or in which you have an ownership interest. Additionally, evaluate your reporting obligations, review your entire organizational structure, and identify your beneficial owner(s). Now is a prime opportunity to review corporate documents, like bylaws, shareholder agreements, and operating agreements, and ensure that they are complete, finalized, and up to date. It would also be prudent to develop policies and procedures to monitor changes to any reporting statuses or beneficial ownership information on an ongoing basis.
As you are wrestling with this new mandatory undertaking, we are here to help. We will guide you through the process to determine if you are required to file a report, whether you qualify for an exemption, who your beneficial owners are, and what changes you should make to your operations to ensure compliance with the CTA now and in the future. Reach out to us today so that we can help you get a jump start on gathering compliance data and make sure you are well prepared and ready to file your initial report.