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In order to prevent and fight money laundering, corruption, tax fraud, terrorist financing, and other illicit activities, the Corporate Transparency Act, or CTA, builds on existing anti-money laundering laws. Commencing January 1, 2024, the majority of U.S. corporate entities, both new and old, will have to submit reports to the federal government about their beneficial owners.

There is no annual filing requirement, but rather a continuing reporting obligation that requires companies to file an updated BOI report within 30 days when there is a change to any information previously reported on a BOI report. In other words, once the initial BOI report is filed, no further reporting is required by the Reporting Company unless and until any of the information contained in the initial BOI report changes.

No. No one needs to report beneficial ownership information to FinCEN until January 1, 2024. FinCEN is currently not accepting any beneficial ownership information reports.

The following entities are subject to the CTA reporting requirements:

   • Domestic reporting companies- This includes corporations, limited liability companies (LLCs), and any other entity that was created with a secretary of state or similar office under the law of a state or tribe

   • Foreign reporting companies- This includes all entities formed under a foreign country registered to do business in any state or tribal jurisdiction.

Someone who owns or controls at least 25 percent of ownership interests in or exercises substantial control over a reporting company.

Substantial control is present when any of the following four conditions apply:

• Senior officer role.

• Authority to appoint or remove other officers or directors.

• Important decision-maker in company finances, business, and/or structure.

• Any other form of substantial control not otherwise indicated in traditional corporate structures.

There are certain exemptions to substantial control wherein the reporting company would not have to include an individual as a beneficial owner.

Failure to comply with the new reporting obligations will result in a civil fine of $500 per day while the violation continues and possible criminal punishment of $10,000 and up to two years in prison.