Tony Freeman is an experienced attorney with Rose Law Group who deals with corporate compliance issues
By Tony Freeman, Rose Law Group Senior Counsel
The Corporate Transparency Act was enacted on January 1, 2021 but a major component that will impact virtually anyone that forms, owns or controls a business in the U.S. is set to take effect on January 1, 2024. Designed to better enable law enforcement to prevent and combat money laundering and other illicit activities, anyone that forms an entity, is the registered agent of an entity, owns an interest in an entity or has control over an entity will be subject to providing detailed personal information that must be reported to FinCEN (Financial Crimes Enforcement Network) of the US Department of Treasury. The failure to comply may result in civil and criminal penalties.
Beneficial Ownership Information will be required for each entity along with its Beneficial Owners and the Company Applicants, subject to certain limited exceptions. Beneficial Owners will be required to disclose their name, date of birth, address, ID and a photo of their ID and face a reporting requirement if that information changes.
These new sweeping requirements will create a large compliance burden and will likely have a far-reaching impact on the formation of new entities, the ownership of existing entities as well as interactions between businesses. Given the potential risks for non-compliance, businesses will be well-served by starting their examination of the compliance requirements well before the effective date.
