The Corporate Transparency Act (“CTA”) takes effect in two stages, January 1, 2024, and January 1, 2025.  The CTA is particularly aimed at beneficial ownership reporting by “small” businesses.

In January 2021, Congress enacted the Corporate Transparency Act (“CTA”), which is intended to bring the U.S. into compliance with international anti-money laundering standards.

Under the CTA, certain entities will be required to register themselves (“Reporting Companies”), the individuals that are the direct or indirect “beneficial owners” of such Reporting Companies and the individuals that undertook the actual creation/formation of the Reporting Company (the “Company Applicants”).

For purposes of the CTA, “Beneficial Owners” include “senior officers” of the Reporting Company as well as individuals determined to have substantial control over the Reporting Company or 25% or more control over the ownership interests in the Reporting Company.  The concept of who is a Beneficial Owner is intentionally broad.

The CTA will be implemented by the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).  The reporting under the CTA will be through a FinCEN operated website and will include basic information about the Reporting Company and basic information (but personal information) about the Beneficial Owners and the Company Applicants, including legal name, date of birth, street address of legal residence (for Beneficial Owners), work address (for Company Applicants), government issued identification information and a copy of such government issued identification.

The information submitted to FinCEN will be subject to strict confidentiality requirements (not available to the general public).  FinCEN may only disclose such information to a statutorily defined group of domestic and international governmental authorities and financial institutions.

Effective Dates

The CTA goes into effect in two phases:

• January 1, 2024 for companies formed or registered from January 1, 2024 onward; and
• January 1, 2025 for companies already formed or registered before January 1, 2024.