The Corporate Transparency Act (CTA) is a recent enactment that mandates increased transparency in entity ownership structures, aiming to combat illicit activities such as money laundering and terrorism financing facilitated by anonymous entities, and has far-reaching implications for entities.  CTA was passed as part of the National Defense Authorization Act for Fiscal Year 2021 but went into effect on January 1, 2024.

The key provisions of the CTA require certain entities to report information about their “beneficial owners” to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.  Beneficial owners are individuals who, directly or indirectly, exercise substantial control over an entity (without or without any entity ownership) or own or control at least 25 percent of the ownership interests of the entity.

Beneficial owner information reports must include entity information such as the entity’s legal name, tax identification number, jurisdiction of formation, and principal address.  The reports must also include beneficial owner information for each individual beneficial owner, including first and last name, residential address, and a photo of either the individual’s driver license or U.S. passport.

Entities formed before January 1, 2024 have until the end of 2024 to file the beneficial owner information report.  Entities formed on or after January 1, 2024 have 90 days from the date of formation to file the information report with FinCEN.  Starting in 2025, this 90-day filing window will be reduced to 30 days.

In addition to initial filing requirements, there are also requirements to update the beneficial ownership information report filed with FinCEN within 30 days of any information on the report changing, including a change of address.

© 2024 Dairy Forward the official newsletter of the Dairy Business Association. Reprinted with permission.