On July 8, 2024, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) released additional FAQs[1] with respect to the beneficial ownership reporting requirements of dissolved entities. The Corporate Transparency Act requires reporting companies to report to FinCEN information about their beneficial owners and company applicants (a “BOI Report”) and is intended to help prevent and combat money laundering, terrorist financing, tax fraud and other illicit activity. The Beneficial Ownership Reporting Rule (the “BOI Rule”), promulgated by FinCEN in September 2022, establishes the types of entities that are reporting companies and how beneficial owners and company applicants are determined, as well as what information is required to be reported about these entities and individuals.
U.S. District Court in Alabama Finds the Corporate Transparency Act Unconstitutional
On March 1, 2024, Judge Liles C. Burke of the U.S. District Court for the Northern District of Alabama ruled that the Corporate Transparency Act (the “CTA”) is unconstitutional[1], leaving its future uncertain. The CTA requires reporting companies to report to FinCEN information about their beneficial owners and company applicants and is intended to help prevent and combat money laundering, terrorist financing, tax fraud and other illicit activity. The ruling enjoined U.S. Department of the Treasury, FinCEN and any other federal agency from enforcing the CTA against the plaintiffs but introduces uncertainty as to the applicability to other reporting companies.
CTA: FinCEN Clarifies Ownership Interests Must be Entirely Controlled or Wholly Owned to Qualify for the Subsidiary Exemption
On January 12, 2024, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) released additional FAQs[1] in response to questions received regarding compliance with various aspects of the Corporate Transparency Act’s Beneficial Ownership Reporting Rule (the “BOI Rule”), which came into effect on January 1, 2024.[2] One such question
CTA – Accessing Beneficial Ownership Information
On December 21, 2023, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued the final rule on Beneficial Ownership Information Access and Safeguards (the “Access Rule”) laying out the protocols for access to the beneficial ownership database by law enforcement and by eligible financial institutions. The Corporate Transparency Act requires reporting companies
CTA – The Large Operating Company Exemption – Not Everybody Can Be A “Big BOI”
In 2021, the Corporate Transparency Act (the “CTA”) was enacted into U.S. federal law as part of a multi‑national effort to rein in the use of entities to mask illegal activity. The CTA directs the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) to propose rules requiring certain types of entities to file
U.S. FinCEN Extends Timeframe for Reporting Companies Created in 2024 to File Beneficial Ownership Information Reports
Today, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued a final rule aimed to ease compliance with certain aspects of the regulations promulgated under the Corporate Transparency Act. The final rule extends the deadline from 30 days to 90 days for entities created or registered during 2024 that do not qualify for an
Evolving Transparency – New CTA Proposals
As the effective date of the US federal Corporate Transparency Act approaches, FinCEN continues to develop its rules almost on a daily basis. Within the past few days, the Financial Crimes Enforcement Network (“FinCEN”) published notice of proposals aimed to clarify and ease compliance with certain aspects of the regulations promulgated under the Corporate Transparency Act. The Corporate Transparency Act requires certain entities (“reporting companies”) to report to FinCEN information about their beneficial owners and company applicants, and is intended to help prevent and combat money laundering, terrorist financing, tax fraud and other illicit activity.[1] The Beneficial Ownership Reporting Rule (the “BOI Rule”), promulgated by FinCEN in September of 2022, establishes who are reporting companies and their beneficial owners and company applicants, as well as what information is required to be reported about these entities and individuals.
Countdown to Transparency: Beneficial Ownership Reporting
In 2021, the U.S. enacted the Corporate Transparency Act (the “CTA”) as part of a multi‑national effort to rein in the use of entities to mask illegal activity. The CTA directs the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) to propose rules requiring certain types of entities to file a report identifying the entities’ beneficial owners and the persons who formed the entity. FinCEN issued the final rule on Beneficial Ownership Information Reporting Requirements (the “Reporting Rule”) on September 29, 2022. FinCEN recently published a Small Entity Compliance Guide intended to assist entities in determining whether they are required to file a report and what information will need to be reported. The Reporting Rule will become effective on January 1, 2024.
Shining a Light on the Corporate Transparency Act: FinCEN’s Rules for Beneficial Ownership Reporting
On January 1, 2021, Congress enacted the Corporate Transparency Act (the “CTA”) as part of the Anti-Money Laundering Act of 2020 in the National Defense Authorization Act for Fiscal Year 2021. Congress passed the CTA to “better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity.” The CTA requires a range of entities, primarily smaller, otherwise unregulated companies, to file a report with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) identifying the entities’ beneficial owners—the persons who ultimately own or control the company—and provide similar identifying information about the persons who formed the entity. The CTA also authorizes FinCEN to disclose this information to authorized government authorities and to financial institutions in certain circumstances.
The Corporate Transparency Act – Government KYC
Summary of the Corporate Transparency Act under the National Defense Authorization Act for Fiscal Year 2021
On January 1, 2021, the Corporate Transparency Act (the “CTA”), which is part of the National Defense Authorization Act for Fiscal Year 2021, became effective after both houses of Congress overrode a presidential veto. The CTA amends the Bank Secrecy Act (the “BSA”) and, once the Treasury Department’s reporting procedures and standards are established, it will require many companies, which have historically been unregulated, to file a report with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) identifying the companies’ beneficial owners. In an attempt to ban anonymous shell companies and “better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity,” government authorities will, for the first time, have access to a database of such beneficial ownership information.