On September 29, 2022, the Financial Crimes Enforcement Network (“FinCEN”) issued final regulations implementing the Corporate Transparency Act (“CTA”), which requires certain entities to file reports identifying two categories of individuals: the beneficial owners of the entity, and individuals who have filed an application with specified governmental authorities to create the entity or register it to do business.
It is anticipated that the resulting transparency will create a massive non-public database for law enforcement, financial institutions, and other authorized users, allowing them to combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity while minimizing the burden on entities doing business in the United States. The effective date of the regulation is January 1, 2024.
Entities required to file include corporations, limited liability companies, and other entities that are (1) created by filing a document with a Secretary of State or any similar body, or (2) are formed under the laws of a foreign country and registered to do business in the United States. Federal and state authorities such as securities reporting issuers, banks, credit unions, money services businesses, brokers or dealers in securities, investment companies or investment advisors, and other select entities are exempt from these requirements. Beneficial owners include any individual who (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of the ownership interests of a reporting company.
FinCEN will further develop the compliance and guidance documents required to administer these requirements, as well as the infrastructure required to administer the new requirements.
For additional information on FinCEN’s finalized regulations please contact Douglas Nakajima at [email protected], or your Marcum tax professional.
