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Corporate Transparency Act (CTA), Update

Corporate Transparency Act (CTA), Update

April 24, 2024

Beginning January 1, 2024, the federal Corporate Transparency Act (CTA) required certain types of entities to file a beneficial ownership information (BOI) report with the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of Treasury.

The Corporate Transparency Act (CTA) is a piece of legislation in the United States aimed at combating money laundering, terrorism financing, and other illicit financial activities. It was enacted as part of the National Defense Authorization Act for Fiscal Year 2021 and became law on January 1, 2021.

The main purpose of the Corporate Transparency Act is to enhance transparency in corporate ownership. It requires certain corporations, limited liability companies (LLCs), and other similar 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 responsible for combating financial crimes.

Beneficial ownership refers to individuals who directly or indirectly own or control a significant percentage of a company's ownership or voting rights. By requiring companies to disclose this information, the aim is to make it more difficult for criminals to use anonymous shell companies to engage in illegal activities such as money laundering, tax evasion, and corruption.

The CTA imposes reporting requirements on entities formed or registered in the United States, with certain exemptions for publicly traded companies, financial institutions, and other entities subject to existing regulatory oversight. Compliance with the Corporate Transparency Act involves providing information such as the beneficial owners' names, dates of birth, addresses, and unique identification numbers (such as driver's license or passport numbers) to FinCEN.

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