The Corporate Transparency Act (CTA) is poised to bring transformative changes to the U.S. business landscape, with a spotlight on corporate beneficial ownership reporting. This initiative represents a significant advancement in U.S. anti-money laundering measures since the USA Patriot Act of 2001. But what does this mean for your small business or estate plan?

Understanding the CTA’s Reach

The CTA requires exhaustive reporting of beneficial ownership for both domestic and international companies. If your business operates within the U.S. or if you’re an overseas entity conducting business stateside, you’ll be obligated to reveal specific personal information. However, there are exemptions for certain entities.

Key Dates to Remember

For businesses established post-Jan. 1, 2024, the reporting obligation kicks in immediately. For those in existence before this date, the deadline extends to Jan. 1, 2025. While certain facets of this legislation are still being worked out, no formal postponement has been declared as of now.

Determining Entities Subject to Reporting

Primarily, entities “established through a filing with a secretary of state or analogous office” are encompassed by this. While trusts are predominantly exempt, entities they own are not. Additionally, there are 23 distinct entity categories, such as SEC-registered issuers, that are excluded.

Information Mandates

Entities will be required to disclose:

  • Names, birthdates, addresses, and distinct identifiers of all individuals recognized as “company applicants” or “beneficial owners.”
  • The identity of individuals overseeing company establishment or registration filings.
  • The term “beneficial ownership” is interpreted expansively, encompassing those wielding “substantial control” or holding a minimum of 25% of a company’s ownership.

Consequences for Non-Adherence

Failure to comply results in a daily fine of $500, capping at $10,000. Deliberate non-compliance, even if it stems from intentional oversight, can culminate in a two-year imprisonment.

Prioritize Preparedness

Even though the full ramifications of the CTA come into play on Jan. 1, 2024, proactive preparation is crucial. Implementing transparent processes and maintaining meticulous records can shield against potential complications. In the realm of business, being informed isn’t merely empowering; it’s a safeguard.

A Torrance Trust Attorney is Your Ally in Navigating the CTA

If you possess a registered entity or are a beneficial owner, potentially as a component of your estate plan, you might be faced with filing requirements with FINCEN in the forthcoming year. It’s important to stay informed to avoid unwarranted penalties.

While the effects of the CTA on those with entities in their estate plans remain somewhat ambiguous, our team is closely monitoring developments and will post updates as we receive them. For questions in the meantime, please do not hesitate to contact us by calling 310-782-6322.