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Frequently
asked questions.

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What is the Corporate Transparency Act (CTA)?

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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.

Should my company report beneficial ownership information now?

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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.

What is considered a Reporting Company under the CTA?

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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.

Who are considered the "Beneficial Owners" and "applicants" of an entity?

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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.

Are there any penalties for non-compliance?

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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.

What types of entities are exempt?

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• Tax-exempt entities- Tax-exempt entities are excused from the requirements as long as they have 501(c)(3) status, are political organizations under Section 527(e)(1) and are charitable or split-interest trusts.

   • Large operating companies- This includes any entity with more than 20 full-time employees in the U.S. and an operating presence at a physical office in the U.S.

   • Inactive entities- This is any entity that existed before January 1, 2020, is not engaged in active business, is not owned by a foreign person, has not undergone an ownership change in the last 12 months, has not sent, or received more than $1,000 in the last 12 months and does not hold any assets currently.

Will the BOI reports be publicly available?

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No, the database is not publicly available.

The database is available to:

   • US federal government.

   • US federal law enforcement.

   • US banks.

   • State and local law enforcement (if a court order is obtained).

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