September 13, 2024

The Corporate Transparency Act (CTA), which took effect on January 1, 2024, is a pivotal piece of legislation designed to combat money laundering, terrorism financing, and other illicit activities by increasing transparency in business ownership. At Omni360 Advisors, we know that staying compliant with new regulations can be challenging, especially for business owners. That’s why we’ve created this resource to help you understand the essentials of the CTA.

For a deeper dive into the CTA, watch our comprehensive 14-minute video, where Attorney Siobhan Kinealy of Omni Legacy Law explains the key aspects of this important law:

Watch the Video on the Corporate Transparency Act Here

Frequently Asked Questions (FAQs) About the Corporate Transparency Act

1. What is the Corporate Transparency Act (CTA)?
The CTA is a federal law aimed at preventing illegal financial activities by requiring businesses to disclose information about their beneficial owners. This law is managed by FinCEN (Financial Crimes Enforcement Network) and applies to most U.S. legal entities.

2. Who does the CTA apply to?
The CTA applies to most U.S.-based corporations, limited liability companies (LLCs), and similar entities. If your company was formed through a state filing process, it is likely subject to the CTA, with some limited exceptions such as publicly traded companies and certain financial institutions.

3. What is beneficial ownership?
Beneficial ownership refers to individuals who either:

• Directly or indirectly own or control 25% or more of the company, or
• Hold substantial control through positions like senior officers or key decision-makers.

4. What are the key reporting requirements under the CTA?
Under the CTA, covered businesses must report the following details for each beneficial owner:

• Full legal name
• Date of birth
• Current address
• A unique identifying number such as a driver’s license or passport number

This information must be submitted to FinCEN and kept up to date if any changes occur.

5. What are the consequences of non-compliance?
Failure to comply with the CTA can result in significant civil and criminal penalties, including fines and imprisonment. It is critical for businesses to ensure timely and accurate reporting to avoid these severe penalties.

6. Are there any exemptions to the CTA?
Yes, there are some limited exemptions, such as:

• Publicly traded companies
• Certain financial institutions
• Entities already subject to robust disclosure requirements (e.g., under the Securities Exchange Act of 1934)

7. What are the deadlines for filing under the CTA?

• Businesses formed before January 1, 2024 must file their initial beneficial ownership report by January 1, 2025.
• Businesses formed on or after January 1, 2024, must file within 90 days of receiving notice of their formation.
• Starting January 1, 2025, businesses will have 30 calendar days to submit their report after receiving formation notice.

At Omni 360 Advisors, we’re dedicated to helping you navigate the complexities of business compliance and legal requirements. If you have any questions about how the CTA affects your business or need guidance on reporting, feel free to contact us.

Disclaimer: The information provided in this post is for educational purposes only and does not constitute legal advice. For personalized legal assistance, please consult your attorney.