The Corporate Transparency Act: What You Need to Know and How to Stay Compliant
The “I haven’t had my coffee” abbreviated version:
The Corporate Transparency Act (CTA) requires businesses to disclose their beneficial ownership information (BOI) to FinCEN. With recent court rulings clearing the way for its enforcement, compliance is now mandatory for most businesses. Penalties for noncompliance can reach $10,000 and up to two years in prison for willful violations. Don’t miss our exclusive webinars to learn how to navigate these changes and protect your business from costly mistakes.
- Register for the General Public Webinar (Jan. 6, 3 PM CST): https://tinyurl.com/h2aajrdv
- Register for the Lawyers Webinar (Jan. 6, 1 PM CST, 1.2 CLE Hours Pending): https://tinyurl.com/4f9vny9z
Want the whole story? Keep reading!
The Corporate Transparency Act (CTA) is one of the most significant regulatory changes in recent years, requiring businesses across the United States to disclose their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). This law aims to combat money laundering, terrorism financing, and other illicit activities by increasing transparency in corporate ownership structures. With recent court rulings clearing the way for the CTA’s enforcement, businesses and legal professionals must now ensure compliance to avoid severe penalties.
Background on the Corporate Transparency Act
Enacted in January 2021 as part of the National Defense Authorization Act (NDAA), the CTA mandates that corporations, limited liability companies (LLCs), and other entities file detailed reports about their beneficial owners. Beneficial owners include individuals who:
- Own 25% or more of the entity.
- Exercise substantial control over the entity.
The CTA’s purpose is to close loopholes that have historically allowed bad actors to use anonymous shell companies to conceal financial crimes.
The law was passed with bipartisan support, reflecting the shared goal of combating illicit financial activities. However, its implementation has faced challenges due to questions about its scope and constitutionality, leading to a series of legal disputes.
Recent Court Rulings and Their Implications
The CTA’s enforcement faced a temporary setback on December 3, 2024, when the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in the case of Texas Top Cop Shop, Inc. v. Garland. This ruling temporarily halted the law’s implementation, citing concerns about its constitutionality.
However, on December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted a stay of the injunction, allowing the CTA’s enforcement to proceed while the Department of the Treasury’s appeal continues. This decision affirms the government’s commitment to the CTA and ensures its compliance requirements are now in effect.
Compliance Requirements
To comply with the CTA, entities must:
- Identify Beneficial Owners:
- Individuals who own at least 25% of the entity or exercise significant control over it.
- Collect Required Information:
- Full legal name.
- Date of birth.
- Residential or business address.
- Unique identifying number (e.g., passport or driver’s license number).
- File BOI Reports with FinCEN:
- Submit accurate and complete information through FinCEN’s online filing system by the established deadlines.
Failure to comply can result in steep penalties, including fines of $500 per day of noncompliance and criminal penalties for willful violations.
What This Means for Your Business
The CTA’s requirements apply to most entities formed or registered in the U.S., except for certain exemptions (e.g., large companies with substantial resources or specific types of nonprofits). Compliance is critical to avoid financial and legal repercussions. For attorneys, the CTA creates new obligations to advise clients effectively and ensure they understand these reporting requirements.
Join Our Webinars to Learn More
To help businesses and legal professionals navigate these changes, we are hosting two exclusive webinars:
- For the General Public:
- Date: Monday, January 6, 2024
- Time: 3 PM CST
- Register Here: https://tinyurl.com/h2aajrdv
- For Lawyers (Includes 1.2 Hours CLE Credit Pending Missouri Bar Approval):
- Date: Monday, January 6, 2024
- Time: 1 PM CST
- Register Here: https://tinyurl.com/4f9vny9z
Both sessions will be hosted by Jeffrey Wax, Attorney at AEGIS Law, and will provide actionable insights into:
- Understanding the CTA’s reporting requirements.
- The impact of recent court rulings.
- Compliance strategies to mitigate risks.
Don’t Wait—Act Now
The CTA is here to stay, and compliance is mandatory for nearly all businesses. Join us to learn how to meet these new requirements effectively and protect your business from costly penalties. Register for the webinar that fits your needs and take the first step toward compliance today.
