As 2024 draws to a close, we issue an urgent reminder to U.S.
and foreign companies operating in the United States to report
their beneficial owners and key officers to the Financial Crimes
Enforcement Network (FinCEN) under the terms of the Corporate
Transparency Act (CTA). The CTA was established to combat financial
crimes such as money laundering, tax evasion, and terrorism
financing by increasing transparency around who owns and controls
companies in the United States. FinCEN requires affected companies
to file beneficial ownership information reports (BOI Reports)
using the BOI E-Filing System.
Filing requirements depend on a company's formation date:
- Companies formed prior to January 1, 2024 – Filing required by December 31, 2024.
- Companies formed during 2024 – Filing required within 90 days of formation.
- Companies to be formed after 2024 – Filing required within 60 days of formation.
The definition of reporting companies is not limited to corporations and limited liability companies. Limited partnerships, professional service entities, and other entities may qualify as reporting companies and, if so, are required to comply with the CTA's reporting requirements. There are 23 categories of exemptions, and while large companies are among them, their subsidiaries often are not.
All impacted companies are required to file their name, any trade name or dba, address, state of formation, taxpayer ID number, and a scan of their formation document(s). All beneficial owners, including officers and directors of corporations, managers of LLCs, general partners of LPs, and any owner of more than 25 percent of issued equity, are required to file their name, current address, date of birth, and a scan of their photo ID.
While the process is not especially time-consuming or onerous, failure to comply can result in stiff penalties. See complete details of the FinCEN filing requirements in our previous article, "Corporate Transparency Act Requires Disclosure of Information Regarding Beneficial Owners to FinCEN."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
