The Corporate Transparency Act (CTA), which is part of the broader Anti-Money Laundering Act, represents a significant shift in how the U.S. government approaches financial transparency and corporate governance. The CTA aims to combat money laundering, terrorist financing, and other illicit financial activities. Under the Act, new reporting requirements are placed on certain business entities. It is crucial for businesses to understand these new requirements in order to avoid penalties associated with noncompliance.
Reporting Requirements and Compliance
Under the Corporate Transparency Act, certain businesses must report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) by filing a BOI report. Beneficial owners are individuals who, directly or indirectly, own 25% or more of the equity interests of the company or exercise substantial control over the entity. In addition to providing information about a company’s beneficial owners, businesses created on or after January 1, 2024 must also provide information about their company applicants.
Corporate Transparency Act Enforcement & Penalties
Failure to comply with the Corporate Transparency Act’s reporting requirements can result in both civil and criminal penalties – some of which may be severe. The CTA authorizes FinCEN to impose civil penalties of up to $500 per day for willful noncompliance and up to $10,000 per violation for knowingly providing false or fraudulent information. Additionally, individuals who willfully provide false or fraudulent beneficial ownership information may face criminal penalties, including fines and imprisonment for up to two years.
Tips to Maintain Compliance
Knowing that the penalties for non-compliance with the Corporate Transparency Act can be severe, it’s important that you stay ahead of the curve and ensure your business stays compliant. A few key tips include:
- Maintain Accurate Ownership Information: It is essential to maintain accurate records of beneficial ownership information so that any changes can be filed with FinCEN in a timely manner. By reviewing documented ownership information with these individuals on a regular basis, either annually or bi-annually, you can ensure that the information you provide, or need to provide, is accurate and up-to-date.
- Stay Informed: The legal landscape of business is always evolving to meet the latest standards. Stay up-to date on the latest developments pertaining to the Corporate Transparency Act to ensure your business stays compliant. The Treasury Department is also expected to issue more detailed regulations on how to comply with the CTA. Keep an eye out for these developments to ensure your business remains compliant.
- Consult with Professionals: Consider seeking professional advice from an attorney who specializes in business law. They will be able to provide expert insights and tips to help your business navigate the complexities of the CTA.
AF Business Counsel is here to help you navigate the intricacies of the Corporate Transparency Act. Together, we will ensure your business remains compliant and avoids any legal and financial pitfalls associated with noncompliance. Call our office at (610) 562-2000 to schedule a consultation to see how AF Business Counsel can help your business navigate the new legal landscape of the CTA.