Starting from January 1, 2024, companies that operate in the United States must ensure compliance with the reporting requirements imposed by the Corporate Transparency Act (CTA) in order to promote market transparency and combat financial crimes.
The CTA mandates that U.S.-operating companies submit formal notifications to the Financial Crimes Enforcement Network (FinCEN), an agency of the U.S. Department of Treasury, by filing a designated online form.
This form shall provide the identifying and contact information of the U.S. company, as well as the identifying information and a copy of the identification document of the ultimate beneficial owner of the reporting company. According to the CTA, an “ultimate beneficial owner” is an individual who directly or indirectly exercises “substantial control” over the company or owns at least 25% of its shares.
All companies formed or registered in the United States as LLC or LLP are required to file such a report with FinCEN, with the exception of those entities that, by their nature, are already obligated to disclose their Beneficial Ownership Information to U.S. government authorities, such as publicly traded companies, banks, securities brokerage firms, and so-called “large operating companies.”
“Large operating companies” are defined as entities that cumulatively meet the following criteria:
a) Employment of over twenty full-time employees in the United States.
b) Gross revenues (or sales) exceeding 5 million dollars per year, as reported in the previous year’s tax return.
Companies required to report to FinCEN, formed or registered before January 1, 2024, must comply by January 1, 2025. Companies formed or registered after January 1, 2024, must comply within 90 days of their establishment or registration date.
Failure to comply may result in penalties of up to $500 per day for each day of delayed reporting, as well as a fine of up to $10,000 and/or imprisonment for up to two years.
Bacciardi Partners has established a dedicated team to assist its clients in managing and ensuring compliance with the recent regulations introduced by the Corporate Transparency Act (CTA).