The Corporate Transparency Act (“CTA”) was passed by the United States Congress at the beginning of 2021 as part of that year’s defense appropriations bill, and it went into effect on January 1, 2024. Most business organizations will now be required to report information on their beneficial owners to the Financial Crimes Enforcement Network of the Department of the Treasury (“FinCEN”).

Many other countries require reporting this sort of information, and Congress was concerned that money laundering through shell companies was too easy in the United States because we were lagging on this issue. Whether you are a logistics broker or an owner/operator, almost every SCI client operating as a corporation or limited liability company will have to report (see 31 USC § 5336(a)(11)(A)). While there is a raft of exemptions, those are mostly for companies subject to preexisting regulatory schemes (see 31 USC § 5336(a)(11)(B)).

SCI clients subject to this law must report information on their “beneficial owners”, defined as individuals who own or control 25 percent or more of the organization’s ownership interest, or who otherwise exercise substantial control over it (see 31 USC § 5336(a)(3)(A)). This information consists of the beneficial owners’ full names, dates of birth, addresses, and a unique number from a government ID (see 31 USC § 5336(b)(2)(A).) Most SCI client companies will probably not have extensive or obscure beneficial owners.

FinCEN has created a website at https://www.fincen.gov/boi where this information can be reported. Preexisting companies have until the end of the year to file their information; companies formed or registered in 2024 will have 90 days to file from the date they receive notice their creation or registration is effective, whereas from January 1, 2025, newly formed or registered companies will only have 30 days.

More information can be found in FinCEN’s frequently asked questions page at https://www.fincen.gov/boi-faqs.

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