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USA Introduces Beneficial Owner Registry: The Corporate Transparency Act (CTA)

To enhance transparency, and following many other countries’ initiatives, the USA is introducing its first Beneficial Ownership Information (BOI) registry, under the rules of the new Corporate Transparency Act (CTA). CTA becomes effective January 1, 2024.

Reporting companies created or registered on or after January 1, 2024, will have 90 days after receiving notice of its creation or registration to file their initial reports. From January 1, 2025, this will reduce to 30 days.

Reporting companies created or registered up until December 31, 2023, must file their initial reports by January 1, 2025.

What is the CTA?

The CTA is a federal law, which aims to prevent and combat money laundering, terrorist financing and other corrupt business practices through increasing the transparency of who owns and controls corporate entities. Reporting companies will be required to submit BOI and company applicant information to the Financial Crimes Enforcement Network (FinCEN). Information will include name, address, date of birth and an individual identification number, such as a passport or driver’s license, together with an uploaded copy of the document. Existing companies do not need to include company applicant information.

What is a ‘reporting company’?

A reporting company is an entity (LLC, LP, Corporation, etc.) registered in the USA – including overseas territories such as Puerto Rico and US Virgin Islands. A foreign company that has registered to do business and/or filed a document with a Secretary of State in any US State may also be required to report.

Some entities will be exempt from the reporting requirements. There are 23 exemptions which include large operating companies, financial institutions/banks, broker dealers, government agencies/authorities.

This is not a tax filing requirement and it will not be a public registry.

You can learn more about the CTA by reviewing the FAQs provided by FinCEN here.

If you have any questions, please contact Head of Client Services, Marina Cristiani.

 

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