Understand Your Obligations Under the Corporate Transparency Act

Picture from https://www.archlegacyfirm.com/have-a-trust-how-the-corporate-transparency-act-affects-you/

Written by:
Gianfranco A. Pietrafesa, Esq.
​Zhao Li, Esq.
Archer & Greiner, P.C.

A new federal law, the Corporate Transparency Act (“CTA”), goes into effect on January 1, 2024. It is intended to prevent money laundering and other bad acts. Unless a company falls into one of twenty-three categories of companies exempt from reporting, it will be required to provide personal information about its owners and senior management (together, the group is known as “beneficial owners”) to FinCEN, which is part of the U.S. Treasury Department. The personal information includes a beneficial owner’s name, date of birth, home address, and driver’s license, passport or other form of government ID.
 
It is estimated that more than 30 million privately-held companies will be required to file reports under the CTA. The new law applies to both U.S. companies and foreign companies registered to do business in the U.S. A company formed or registered on and after January 1, 2024 must file a report within 90 days. A company formed or registered prior to January 1, 2024 must file a report by January 1, 2025.
 
A company should take immediate action to (1) analyze whether it is a reporting or exempt company, (2) determine who is a beneficial owner of the company (which may not be straightforward for many companies), and (3) collect personal information from beneficial owners. Take note that if a company fails to comply with the CTA, there are significant civil and criminal penalties on the company as well as its senior management and beneficial owners.
 
To understand your obligations under the CTA, we recommend that you review our advisory, which can be found here:
 
ARCHER & GREINER ADVISORY