What Is The Corporate Transparency Act?
- The Corporate Transparency Act (CTA), enacted in 2021, aims to fight financial crime by requiring many U.S. businesses to report information about their true owners or individuals with control, known as beneficial owners. This information helps authorities identify and prevent money laundering, terrorism financing, and other illegal activities.
- In effect since January 1, 2024, the CTA requires businesses to file a Beneficial Ownership Information Report with FinCEN. This report details the individuals who ultimately own or control at least 25% of the company or have significant decision-making authority.
- By increasing transparency in corporate ownership, the CTA helps to ensure a fairer and safer financial system for everyone.
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Why does the CTA matter to me?
The CTA matters because it helps prevent illegal activities and reduce fraud. Filing a Beneficial Ownership Information Report is crucial to maintaining good legal standing and protecting your business.
What happens if I don’t file a BOI?
Failing to file a Beneficial Ownership Information Report can lead to hefty fines of up to $500 per day and even potential criminal penalties. Don’t risk non-compliance – ensure a smooth filing process.
Important Dates to Remember
The deadline depends on when your company was formed:
January 1, 2025
Existing companies (formed before January 1, 2024): You must file your BOIR by January 1, 2025.
60 days
Companies formed between January 1, 2024, and January 1, 2025: File your BOIR within 90 days of the company’s formation date.
30 day
Companies formed after January 1, 2025: File your BOIR within 30 days of the company’s formation date.
Important: changes to your company’s eligibility status or beneficial ownership must be filed within 30 days of the change.
Important Terms to Know
Corporate Transparency Act (CTA)
The Corporate Transparency Act (CTA), enacted in 2021, is a law in the United States that aims to combat financial crimes like money laundering and terrorism financing. It achieves this by requiring many businesses operating in the U.S. to report information about their true owners, known as beneficial owners. This information is submitted to a government database, allowing authorities to identify suspicious activity more easily.
Beneficial Ownership Information (BOI)
Identifying information about the individuals who directly or indirectly own or control a company.
Beneficial Ownership Information Report (BOIR)
A Beneficial Ownership Information Report (BOI report) is a document filed with the Financial Crimes Enforcement Network (FinCEN) as a requirement of the Corporate Transparency Act (CTA). This report details the individuals who ultimately own or control a business, known as beneficial owners.
FinCEN
FinCEN stands for the Financial Crimes Enforcement Network. It’s a bureau of the U.S. Department of the Treasury tasked with safeguarding the financial system from illicit use.
FinCEN ID
A FinCEN Identifier is a unique number that is issued to an individual or a reporting company after certain information is provided to FinCEN.
Reporting Company
Reporting companies are companies required to report their beneficial ownership information. There are two types of reporting companies.
- Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
- Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar