The Corporate Transparency Act (“CTA”) imposes on many companies (both domestic and foreign entities registered to do business in the U.S.) new federal reporting obligations including providing information on the beneficial owners of those companies to the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).

The reporting requirements are effective January 1, 2024. Non-exempt companies created or registered prior to the effective date of January 1, 2024, will have until the end of 2024 to file the required reports. Non-exempt companies first created or registered in 2024 will have only 90 days to meet their initial reporting obligations. Non-exempt companies first created or registered in 2025 and thereafter will have only 30 days to meet their initial reporting obligations.

Those who are unfamiliar with the CTA can find additional information at Foley Hoag’s Corporate Transparency Act Resource Center, designed to provide you with essential information on exemptions, reporting obligations, and more under the CTA. The Resource Center contains both guidance from Foley Hoag as well as links to government resources that will help you navigate the new regulatory requirements.

The CTA has been characterized by some as the most significant anti-money laundering reform in a generation and, as the legislation itself states, will help bring the United States into closer alignment with international standards concerning anti-money laundering and countering terrorism financing. Beneficial ownership information will be an important tool for regulators and enforcement agencies as they seek to move against those who violate anti-money laundering, terrorism financing, and sanctions laws, among others.  However, the law has also been criticized for imposing disproportionate obligations on small, non-public companies. 

The CTA is an important development for companies required to report beneficial ownership information, but there are a number of reporting exceptions (summarized in the Resource Center) that companies should evaluate and determining who is a beneficial owner can be complicated and includes more than just equity holders.