The Corporate Transparency Act (Part 3): Reporting Requirements

On January 1, 2021, Congress enacted the Corporate Transparency Act (the “CTA”) as part of the Anti-Money Laundering Act of 2020 and its annual National Defense Authorization Act. The new legislation requires certain entities to report information about their owners, management and the individuals who helped create the entities to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). The information reported to FinCEN is intended to assist law enforcement in combating money laundering, tax fraud, terrorist financing, and other unlawful activities that occur through shell and front companies.

This is the third article in a new series about the CTA. This edition will outline the information required to be reported to FinCEN by reporting companies and highlight the timeline for reporting such information.

Information Required to be Reported under the CTA:

The CTA mandates specific business entities, referred to as “reporting companies,” to report certain information regarding (1) the reporting company itself, (2) the reporting company’s beneficial owners (the “Beneficial Owners”) and (3) the individuals responsible for creating the entity or registering the entity to do business in the US (the “Company Applicants”).

Reporting Company Information:

Generally, an initial report must include:

For more information related to which entities qualify as “reporting companies,” please read our other articles in this series: The Corporate Transparency Act (Parts 1-4).

Beneficial Owner and Company Applicant Information:

Generally, an initial report must include the following information related to all of its Beneficial Owners and two of its Company Applicants:

For more information on who qualifies as a Beneficial Owner or Company Applicant, please read our other article in this series: The Corporate Transparency Act (Part 4).

Exceptions to Disclosure of Required Information:

Deadlines for Filing:

A reporting company itself is responsible for filing the report.

Requirement to Update Reports:

A reporting company itself is responsible for updating and correcting any changes to the previously reported information about the reporting company and its Beneficial Owners. There is no materiality threshold or annual filing requirement; a reporting company must report any and all changes to the required information.

Who has access to the reported information?

Penalties for Failure to Comply:

The CTA provides for civil and criminal penalties for any person who willfully (a) provides or attempts to provide false or fraudulent information, including false or fraudulent documentation, or (b) fails to report complete or updated information to FinCEN.

Safe Harbor Period:

FinCEN is currently in the process of creating the specific reporting system and additional regulations surrounding the CTA. Therefore, the information discussed in this article is subject to change.

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National Law Review, Volumess XIII, Number 251