John E. Chapman
Chief Executive Officer
Starting January 1st, 2024, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) started enforcing the Corporate Transparency Act of 2021 designed to hinder illicit finance. The Corporate Transparency Act requires many entities to now report information about their ultimate beneficial owners to FinCEN.
Who it Affects
Companies required to report are called reporting companies. 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 office.
There are 23 entity types exempt from this requirement. For many of these exempt entities, they are already subject to more stringent reporting requirements. A full list of exemptions can be found in section C.2. at this link.
How to Comply
If your business is deemed a reporting company, you must file a Beneficial Ownership Information Report (BOIR) with FinCEN. This report details information about the entity’s beneficial owners, including their name, address, date of birth, and Social Security number. Entities created before January 1, 2024, have until January 1, 2025, to file, however, entities created January 1, 2024, or later must file within 90 days of creation. You can file a BOIR or see a blank filing form with the required information on the FinCEN site here.
Penalties for Non-Compliance
The cost of non-compliance with the Corporate Transparency Act is high. A person who willfully violates the reporting requirements may be subject to civil penalties of up to $500 per day that the violation continues (adjusted for inflation), as well as up to criminal penalties of up to two years imprisonment and fines up to $10,000.
