Corporate Transparency Act of 2024

The Corporate Transparency Act (CTA) was enacted as part of the Anti-Money Laundering Act of 2020. The CTA imposes new reporting requirements for beneficial ownership information on certain "reporting companies." Reporting companies include corporations, limited liability companies, and similar U.S. entities, as well as foreign companies that are registered to do business in the U.S. The CTA defines a "beneficial owner" as an individual who, directly or indirectly, either "exercises substantial control over the entity" or "owns or controls not less than 25% of the ownership interests of the entity." Reporting companies must disclose the beneficial owner's full legal name, date of birth, current residential or business address, and unique identifying number from an acceptable identification document or FinCEN identifier. There are a number of exemptions to the reporting requirements, including for publicly traded companies, wholly owned subsidiaries of publicly traded companies, and companies that employ more than 20 employees on a full-time basis in the U.S., have an operating presence at a physical location in the U.S., and have filed income tax returns in the U.S. demonstrating more than $5 million in gross receipts or sales. The CTA also sets out penalties for noncompliance. For example, it is unlawful for any person to willfully provide false or fraudulent beneficial ownership information to FinCEN, or to willfully fail to report complete or updated beneficial ownership information. Violators may be fined, imprisoned, or both.

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