Come January 1, 2024, the Corporate Transparency Act (CTA) will come into force, aiming to combat money laundering by mandating most companies and their beneficial owners to register with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).

Under the CTA, FinCEN is tasked with creating and maintaining a federal database for “beneficial ownership information” (BOI). Entities, except trusts, formed or registered in the U.S. must register on the BOI database, unless eligible for one of the 23 specified exemptions. These exemptions encompass entities making substantial public disclosures or larger companies meeting certain criteria like employing over 20 people, reporting revenues exceeding $5 million, and having a U.S. physical presence. Ongoing assessment of exemption applicability is vital; entities dropping below the 20-employee threshold will require prompt filing.

Non-exempt entities must furnish specific details for each “beneficial owner,” including full legal name, date of birth, current address, and a unique identification number from an acceptable document. A “beneficial owner” is one who holds substantial control over the entity or owns/controls at least 25% of its ownership interests. Most “C-Suite” corporate officers are presumed to exercise substantial control.

For entities established after 2024, at least one “Company Applicant” must be identified, representing the individual controlling the formation filing.

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