Updated: May 5
The Corporate Transparency Act was enacted on January 1st of this year. This new law requires privately held businesses in the United States to register the personally identifiable information of their beneficial owners to the Financial Crimes Enforcement Network (FINCEN).
The stated purpose of the beneficial ownership disclosure is to aid law enforcement. Any federal agency engaged in national security, intelligence, or law enforcement can access the beneficial ownership information by request through appropriate protocols. State, local, or tribal law enforcement agencies will also be able to access the beneficial ownership information if they are authorized to seek such information in criminal or civil investigations. Others that may be permitted access include banks, federal regulators, and agencies acting on behalf of foreign governments.
Under the Act, businesses must identify any individual as a beneficial owner that owns or controls twenty-five percent or more of a business entity. In order to abide by the new regulations, the name, date of birth, current address, and unexpired driver’s license number or passport number of the beneficial owner must be disclosed. The regulations apply to most corporations, limited liability companies, and partnerships. They even apply to some trusts.
Many entities are exempt from these reporting requirements. They include publicly traded companies as well as businesses meeting certain revenue and employment thresholds. Any business that believes it is exempt must apply for exemption with FINCEN.
The deadlines for complying for these regulations depend on the date of formation of the business. New businesses will be required to comply at the time of formation while existing businesses will need to be in compliance within one year of the effective date of the regulations. New or amended filings will be required for changes in beneficial ownership.
Currently, the Treasury has until January 1, 2022 to adopt the new regulations regarding the beneficial ownership disclosure requirements. While waiting for adoption of the final regulations, business owners should prepare by collecting the necessary information to fulfill their filing requirements.
If you have any questions about whether your business will be subject to these new regulations, you can call us at 919-651-3725 or visit our website to book a consultation with one of our trusted business attorneys.
NOTE: This post is for informational purposes only. No attorney-client relationship has been formed.