The Corporate Transparency Act (CTA), passed by Congress in 2021, became effective on January 1, 2024. Hunton Andrews Kurth LLP can assist you in understanding the implications of the CTA for your entities and transactions, and provide guidance in ensuring compliance with the new regulatory framework.

The CTA is designed to combat money laundering and requires some entities to report beneficial ownership information to Financial Crimes Enforcement Network (FinCEN) under FinCen’s final regulations issued on September 29, 2022 (the Final Rule).

The CTA requires that domestic corporations, LLCs, or other entities created by filing formation documents with a state’s Secretary of State’s office (or similar government agency), as well as non-US entities that are formed under the law of a foreign country and registered to do business within the United States, file a Beneficial Ownership Information (BOI) report. BOI reports contain information about the reporting company, its beneficial owners, and individuals responsible for creating the reporting company if it was formed after January 1, 2024.

There are 23 exemptions to the BOI reporting requirement; the exemptions include entities such as publicly traded companies, banks and other financial institutions, insurance companies, certain tax-exempt entities, inactive entities, and “large operating companies” (companies with at least one physical office in the United States, 20 or more full time employees, and more than $5 million in gross receipts). Each exception has specific criteria that must be met; therefore, it is very important that such criteria are reviewed carefully before determining exception status.

Many entities will not qualify for any exemptions, which are primarily designed to exempt companies that are already heavily regulated. Many small closely-held businesses will now be required to disclose information about themselves and their owners. Non-exempt entities created on or after January 1, 2024, are required to file BOI reports within 90 days after their creation. Any non-exempt entities in existence before January 1, 2024, have until January 1, 2025, to file their initial reports.

We understand that many of our clients’ needs and transaction structures may require deeper analysis and that updates from FinCEN will be forthcoming as this new regulatory structure is implemented. Navigating the intricacies of the CTA can be complex and our team is available to provide counsel tailored to your specific needs.