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Important Notice: New FinCEN Reporting Obligations Under the Corporate Transparency Act (CTA)

29 December 2023

Thomas S. Tripodianos

There are critical forthcoming changes related to the disclosure of Beneficial Ownership Information to the Financial Crimes Enforcement Network (FinCEN). These changes are in line with the requirements of the Corporate Transparency Act (CTA) and accompanying Treasury regulations. The introduction of this mandate marks a significant move in the fight against money laundering and the misuse of shell companies for illicit purposes.

  1. Reporting Entities: Entities such as corporations, LEGImlimited liability companies (LLCs), and similar organizations established through a Secretary of State or equivalent authority are required to report Beneficial Ownership information to FinCEN. It's important to note that exemptions apply to large corporations meeting certain criteria, publicly traded companies, and tax-exempt organizations. Additionally, foreign entities active in the U.S. may be subject to these reporting requirements.
  2. Identifying a Beneficial Owner: A Beneficial Owner is defined as an individual who, either directly or indirectly, has control over an entity or holds a minimum of 25% equity interest in it. This encompasses senior executives and individuals who play a significant role in pivotal decisions.
  3. Disclosure Requirements: Entities must disclose essential details about the company and personal information of Beneficial Owners, including names, dates of birth, addresses, and identification documentation. This data will be maintained in a secure, non-public database, accessible only to specific government bodies.
  4. Compliance Timelines:
    • Entities established before January 1, 2024: Must report between January 1, 2024, and January 1, 2025
    • Entities established in 2024: Required to report within 90 days of their formation.
    • Entities established in 2025 or later: Obligated to report within 30 days of formation.
  5. Consequences of Non-Compliance: Non-compliance can lead to a daily civil penalty of $500, a criminal fine up to $10,000, and a potential imprisonment of up to two years.
  6. Continuous Reporting Responsibilities: Any modifications in Beneficial Ownership or company details post-initial report must be updated within 30 days. The same penalties are applicable for non-compliance or inaccurate reporting.

Immediate Steps: We strongly advise you to assess your company's situation and prepare for adherence to these new reporting obligations. If your company was established before January 1, 2024, ensure readiness to file your initial report starting January 1, 2024.

Our Support: At Welby, Brady & Greenblatt, LLP, we are dedicated to guiding you through these regulatory changes. Our services include determining your business's applicability to these requirements, identifying Beneficial Owners, and facilitating accurate and timely reporting. Should you need more information or assistance regarding these updates, please feel free to reach out to us.

If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440