We would like to highlight the changes in US corporate law that came into force at the beginning of 2024. Thus, under the new Corporate Transparency Act (CTA), companies registered in the United States must now submit information about their beneficial owners in the form of a report to the Financial Crimes Enforcement Network (FinCEN).
This rule was adopted as part of the global fight against the shadow economy and money laundering and, according to the initiators, should ensure transparency in the ownership of US business structures.
The beneficial ownership reporting requirement applies to all existing U.S. companies and those that will be created in the future.
However, there are exceptions for certain types of organizations that are exempt from beneficial ownership reporting:
- Issuers of securities, reporting on securities
- State authorities
- Credit unions
- Depository institutions and holding companies
- Money business
- Securities broker or dealer
- Exchange or clearing agency
- Other persons registered under the Exchange Law
- Investment company or investment advisor
- Venture capital fund consultant
- Insurance company
- Insurance producer with a state license
- Organization registered under the Commodity Exchange Act
- Accounting firm
- Public utility company
- Municipal enterprise of the financial market
- Joint investment vehicle
- Organization exempt from taxes
- Organization that provides assistance to a tax-exempt entity
- Large operating company
- Subsidiary of an exempt entity
- Inactive company
All companies that are required by the Law to report on their beneficiaries can be divided into 3 categories according to the deadlines for submitting the report:
1) Companies incorporated before January 1, 2024 - report within a calendar year, i.e. until January 1, 2025.
2) Companies incorporated between January 1, 2024 and January 1, 2025 - report within 90 days from the date of registration.
3) Companies incorporated after January 1, 2025 - report within 30 days from the date of registration.
All reports will be filed electronically through a secure file system on the FinCEN portal, which will be available on the beneficial owner's website after January 1, 2024.
In cases where a company has changed its state of business after registration (for example, it was registered in Delaware and then registered to do business in another state), a second filing of the beneficial ownership report is not required.
!It is important to note that the filing of a beneficial ownership report also applies to foreign companies operating in the United States. For example, if your company is incorporated in Canada but is registered to do business in one of the US states, you must report on the company's beneficial owners in that state.
The regulator FinCEN will provide access to the register of beneficiaries exclusively to the following persons:
- federal, state and local officials, as well as certain foreign officials who submit a request through a U.S. federal government agency;
- financial institutions under certain circumstances and with the consent of the reporting company.
Public access to the registry is not provided.
Failure to comply with these beneficial ownership reporting requirements may result in civil fines of up to USD 500 for each day of non-compliance. In addition, the responsible person may also be subject to criminal penalties of up to two years' imprisonment and a fine of up to USD 10,000.
Potential violations include:
- intentional failure to file a beneficial ownership report;
- intentional submission of false information on beneficial ownership;
- intentional failure to correct or update previously submitted beneficial ownership information.
If necessary, our specialists will help you submit the beneficial ownership report on time and understand all the details of this process. Contact us!