A new federal law called the Corporate Transparency Act (CTA) went into effect at the beginning of 2024. As a result, more than 32 million small businesses must report beneficial owner information (BOI) – identifying information about individuals who directly or indirectly own or control a company – to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
The CTA passed as part of an effort to modernize Congress’ long-standing Anti-Money Laundering Act and help federal agencies combat money laundering and other financial crimes. With the robust network of ownership data that the CTA will generate, the government will have an easier time finding and exposing those who may attempt to launder money or commit other financial crimes.
“After more than a decade-long campaign to end the formation of anonymous shell companies that are abused by the criminal and the corrupt, the United States has enacted historic reforms to protect Americans and our financial system from abuse,” said Ian Gary, executive director of the FACT Coalition, after Congress enacted the CTA in early 2021. “We applaud Senate and House lawmakers for passing this critical, bipartisan anti-corruption reform by overwhelming margins.”
The advent of the CTA has created mandatory work for millions of businesses around the country. These organizations must fully comply with CTA or face potentially significant civil and/or criminal penalties. They can either complete the required work themselves or use a tool that automates and standardizes the reporting process.
FinCEN has published a Q&A document about the CTA. Platinum Filings also has produced a white paper recapping the relevant parts of the CTA for businesses everywhere, and what they need to do to comply.
Courtesy Platinum Filings.
