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As we enter twelve months into 2024, we remind you that there are less than thirty days left to comply with the Corporate Transparency Act—Beneficial Owner Reporting.
New compliance requirements for corporate entities in the USA.
The US Treasury Department Financial Crimes Enforcement Network (“FinCEN”) has recently enacted regulations (the “Rule”) implementing the Corporate Transparency Act (the “Act”). The Act requires that United States entities’ beneficial owners and controlling persons, including corporations and limited liability companies, be named in a federal registry for United States (US) legal entities. These databases will not be open to the public.
The Rule is a federal requirement mandating the presentation of reports in 2024.
Please note that various states, including New York, will also require the creation of entity-beneficial ownership and controlling person databases in 2025.
Penalties for non-compliance
Failure to comply with the reports may result in civil penalties, starting from $500 for each day the violation continues (up to $10,000), or criminal penalties, including imprisonment of up to 2 years.
What entities must report?
All entities created in the United States by filing documents with a state must provide reports. Entities such as Corporations, Limited Liability Companies, and Limited Partnerships are included in this category.
Foreign entities registered to do business in any state must also file reports. For example, a foreign company registered to transact business in New York would be a reporting company.
What must be reported?
Beneficial Owners and Controlling Persons: The terms “Beneficial Owners” and “Controlling Persons” refer to any individual (natural person) who, directly or indirectly, either (i) owns or controls 25% or more of the ownership interests (i.e., shares or membership interests) of the reporting company; and (ii) exercises substantial control over the reporting company.
What are the deadlines?
- Entities formed before January 1, 2024, must file their first reports by January 1, 2025;
- Entities created during the calendar year 2024 must file within 90 days of being created or registered to do business in the United States.
- Entities created or registered on or after January 1, 2025, must file within 30 days of receiving actual or public notice of their creation or registration becoming effective.
What information is required from Beneficial Owners and Controlling Persons?
The report must include the following information of each beneficial owner:
- Full legal name.
- Date of birth.
- Current Address.
- ID Nº (Passport, US State ID, or US Driver’s License)
- An image of the ID.
The following information is required from each reporting company:
- Full legal name.
- Trade name(s).
- Address.
- Jurisdiction.
- Taxpayer identification number
Who can help?
Determining which individuals must be included in the FinCEN Report constitutes rendering legal services, and therefore, you should hire a lawyer to help you comply with the Corporate Transparency Act.
Can you apply online?
Yes, you can, it’s very easy, and it takes 5 mins. Go to: https://boiefiling.fincen.gov/
Lastly, you can apply alone if you have a simple LLC or Corporation in the USA. Simple means you or your US partners are the only owners. So, there are no foreign entities or offshore companies, just US-based people owning a US company.
