The Corporate Transparency Act (CTA) is a significant piece of legislation that will require all domestic and foreign entities formed or registered to do business in the United States to disclose certain information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). The CTA is designed to combat money laundering, terrorist financing, and other financial crimes by making it more difficult for criminals to hide their identities behind corporate structures. 

What is a beneficial owner? 

A beneficial owner is an individual who, directly or indirectly, either: 

• Exercises substantial control over a reporting company, or
• Owns or controls at least 25% of the ownership interests of a reporting company. Substantial control can be exercised through voting rights, ownership of equity, or other means.

Who is required to file a beneficial ownership information (BOI) report? 

All domestic and foreign entities formed or registered to do business in the United States, unless exempt, are required to file a BOI report with FinCEN. There are a few limited exemptions, such as for publicly traded companies, banks, and investment advisors. 

What information must be reported in a BOI report? 

A BOI report must include the following information about each beneficial owner:

• Full name
• Date of birth
• Residential address
• Unique identifier (such as a Social Security number or passport number)

When are BOI reports due? 

For new entities formed or registered to do business in the United States after January 1, 2024, a BOI report must be filed within 30 days of formation or registration. For existing entities, a BOI report must be filed by January 1, 2025. 

What are the penalties for failing to file a BOI report? 

Entities that fail to file a timely and accurate BOI report may be subject to civil penalties of up to $500 per day. Additionally, criminal penalties may be imposed for intentionally violating the CTA, including fines of up to $500,000 and imprisonment for up to five years.

What are the implications of the CTA for businesses? 

The CTA will have a significant impact on businesses of all sizes. Businesses will need to identify their beneficial owners and collect the required information about them. This information will then need to be reported to FinCEN in a timely and accurate manner. 

How Bagchi Law can help 

Bagchi Law can help businesses to comply with the CTA by: 

• Conducting a beneficial ownership assessment to identify and collect the required information about all beneficial owners. 
• Preparing and filing BOI reports on behalf of businesses.
• Advising businesses on the CTA’s requirements and how to best comply with them. 

The CTA is a complex piece of legislation, but Bagchi Law can help businesses navigate the requirements and ensure compliance. 

Additional considerations for Bagchi Law clients 

In addition to the general considerations outlined above, there are a few specific considerations for Bagchi Law clients. First, Bagchi Law clients are often involved in complex corporate transactions. The CTA’s requirements may add additional complexity to these transactions. Bagchi Law can help clients structure their transactions in a way that minimizes the impact of the CTA. 

Second, Bagchi Law clients often operate in multiple jurisdictions. The CTA’s requirements may vary from jurisdiction to jurisdiction. Bagchi Law can help clients understand the CTA’s requirements in each jurisdiction where they operate and ensure compliance. 

Finally, Bagchi Law clients are often subject to heightened regulatory scrutiny. The CTA is just one of the many regulations that Bagchi Law clients must comply with. Bagchi Law can help clients develop a comprehensive compliance program that addresses all of their regulatory obligations. 

If you have any questions about the CTA or how to comply with it, please contact Neil Bagchi at neil@bagchilaw.com.