Legal Alert
Deadline Approaching: Ensure Compliance with the Federal Corporate Transparency Act (CTA)
October 15, 2024
A federal law that took effect in January 2024 requires certain businesses to disclose information to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) by the end of 2024. The Corporate Transparency Act (CTA) was enacted to make it harder for criminals, organized crime rings, terrorists, and other illicit actors to hide their identities and launder money through anonymous shell companies.
If you have not already done so, it is important you take the following steps to ensure your company's compliance with the law:
1. Contact Your Lawyer to Determine Whether the Law Applies to Your Entity
The CTA applies to all “reporting companies.” A reporting company is any entity that was created by filing a document with the secretary of state or similar office and which does not qualify for an exemption. Generally, exemptions include:
(a) Publicly traded organizations
(b) Large businesses, as defined by the statute
(c) Banks, bank holding companies, and federal or state credit unions
(d) Investment companies
(e) Public utilities
(f) Insurance companies
(g) Tax-exempt organizations
(h) Inactive businesses
Unless an exemption applies, reporting is mandatory.
2. File a Beneficial Ownership Report
All "reporting companies" per the above—both newly formed and existing—must file a Beneficial Ownership Report with FinCEN. More information regarding filing requirements can be found on the FinCEN Beneficial Ownership Information website.
3. Make Note of the Deadline
A reporting company formed prior to Jan. 1, 2024, has until Jan. 1, 2025, to file its required information. A reporting company formed after Jan. 1, 2024, will have 90 days from formation to file its required information. (For entities formed after Jan. 1, 2025, the reporting period will be shortened to 30 days.) After the reporting company’s initial filing, it will be required to report changes in the required information to FinCEN within 30 days of the change.
Failure to comply with the CTA can result in the imposition of civil or criminal penalties.
We Can Help
If you have questions about how to prepare your company for the CTA, please write to us at CTACompliance@maslon.com.