The Compliance Guide to the Corporate Transparency Act

As part of the National Defense Authorization Act of 2021 Congress adopted the Corporate Transparency Act (or “CTA”). The CTA includes some of the most significant changes to US anti-money laundering (“AML”) laws in recent years. One of the most significant changes is that the CTA will create a new national database of corporate beneficial ownership information. Complying with the CTA will impose major new obligations on companies and their owners.

The CTA requires corporations, partnerships, limited liability companies and other businesses to file a beneficial ownership report. The beneficial ownership report must disclose each beneficial owner of the company, along with specified personal data about each individual. Complying with this requirement will have a significant impact on entrepreneurs, business owners, attorneys and others involved in forming new companies.

The CTA empowers FinCEN, the Financial Crimes Enforcement Network of the U.S. Treasury Department to implement this new law. In December 2021 FinCEN published is initial draft of proposed regulations.

Under FinCEN’s proposed regulations, companies formed after the effective date of the regulations must file an initial beneficial ownership report fourteen days after they are formed. Entities that existed before the effective date of the new regulations will have one year to file an initial beneficial ownership report.

The Compliance Guide to the Corporate Transparency Act provides a valuable resource for lawyers, accountants and business owners that will:

• Describe how the Corporate Transparency Act applies to U.S. and foreign companies

• Explain who must file reports under the CTA

• Explain who is a beneficial owner and how to apply the definition of "substantial control"

• Outline how to determine whether a company is exempt from the CTA's reporting requirements

• Suggest changes in corporate governance to help companies ensure they can comply

Publication expected 2022