The time has come to finalize those end-of-year checklists and for anyone with US entities, foreign entities doing business in the United States, or for those who are planning to form or register entities to do business in the United States, the United States Corporate Transparency Act (CTA) should be at the top of the list. This includes investment advisers and funds that they manage.
Effective on 1 January 2024, the CTA requires all newly formed and currently existing “Reporting Companies” (as defined in the CTA) to provide certain ownership and control information to the Financial Crimes Enforcement Network (FinCEN). While Reporting Companies formed on or after 1 January 2024 have had a 90 day window to report to FinCEN, Reporting Companies in existence prior to the beginning of 2024 were given the remainder of the year to comply with the CTA requirements.
However, as we quickly approach year end, that compliance window continues to shorten, Reporting Companies should ensure that they have positioned themselves to meet the 1 January 2025 filing deadline. We note that the analysis for reporting under the CTA can be complex and time consuming and one that must be done on an entity-by-entity basis. FinCEN has said that it cannot rule out potential technical issues or website outages due to the expected high volume of filings the last two weeks of the year. FinCEN's stated position is that a potential failure or difficulties of their system to accept filings for technical reasons will not excuse late filings. As such, the CTA should remain a priority well before the last few weeks of the year to allocate sufficient time to determine which entities may be Reporting Companies and to prepare any required filings, and we are encouraging our clients to file sooner rather than at the last minute.
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