New Corporate Transparency Act Financial Crimes Enforcement

AdobeStock_357298238-300x111Corporate Transparency Act (CTA)

The Corporate Transparency Act (“CTA”) was enacted by the U.S. Bureau Department of Treasury to address growing concerns about the use of shell companies and other opaque ownership structures to facilitate financial crimes like money laundering, tax evasion, and terrorist financing. By making beneficial ownership information more readily available, the law aims to deter and disrupt illegal activities. The CTA establishes a national beneficial ownership information registry accessible to law enforcement and authorized government agencies.

When and how should my company file its initial report?

If your company was created or registered prior to January 1, 2024, you will have until January 1, 2025, to report Beneficial Ownership Information (BOI) by filing the report online at If your company was created or registered on or after January 1, 2024, and before January 1, 2025, you must report BOI within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier. If your company was created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective. Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days.

Penalties/Criminal Risks/Senior Officer Risks

Failure to comply with the CTA can result in civil penalties of up to $50,000 per violation. Willful violations could lead to criminal fines of up to $250,000 and/or imprisonment for up to 5 years. Senior officers who knowingly or recklessly fail to comply could be personally liable for civil penalties.

Who are Reporting Companies?

All companies formed or registered in the US (except for 23 exempt entities) are considered “reporting companies” and must comply with the CTA. The CTA requires non-exempt companies “Reporting Companies” to report Beneficial Ownership Information (BOI) electronically through FinCEN’s website link listed below. Is your company an Exempt Company or a Reporting Company? To determine if your company is an exempt company or not, please review FinCEN Small Entity Compliance Guide for a full list of 23 exempt entities to help you determine if your company is exempt or a Reporting Company

Who are Beneficial Owners?

Beneficial Owners are the individuals who ultimately control or own a company, even if they don’t hold the shares in their own name. This could include individuals 25% or more ownership/voting power or substantial control over management/decision-making. For more information regarding beneficial ownership, see Small Entity Compliance Guide.

Who are Company Applicants?

There are two categories of company applicants – the “direct filer” and the individual who “directs or controls the filing action”. If more than one individual is involved in the filing, then two company applicants must be reported.

What is a FinCEN identifier and how can I use it?

Financial Crimes Enforcement Network – A “FinCEN identifier” is a unique identifying number that FinCEN will issue to an individual or reporting company upon request after the individual or reporting company provides certain information to FinCEN. Starting January 1, 2024, individuals can apply for a FinCEN identifier online by submitting their personal details and a copy of an acceptable ID.FinCEN identifiers are optional but can be used by individuals and companies to streamline Beneficial Ownership Reporting.

As the Corporate Transparency Act “CTA” reshapes the business landscape, Structure Law Group, LLP stands ready to help you utilize our knowledge and experience to navigate its complexities effectively. Our Silicon Valley, Los Angeles, and Austin, Texas business lawyers offer clients practical advice through all stages of a business’ life to help avoid costly legal matters while maintaining a healthy bottom line for the business. Whether it’s grasping the reporting obligations, pinpointing beneficial owners, or acquiring FinCEN identifiers, we’ll work alongside you to ensure compliance and safeguard your company’s standing. Contact us today at (408) 441-7500 or online to utilize our comprehensive services and navigate the CTA with clarity and confidence.