Compliance with Corporate Transparency Act Beneficial Ownership Information Reporting (CTABOI) Requirements

By: Peter D. Singh Jr.

Since January 1, 2024, most companies and their owners have been required to report beneficial ownership information (BOI) to the United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN) pursuant to the Corporate Transparency Act (CTA). Companies formed before 2024 have until January 1, 2025 to report, while companies formed in 2024 have up to 90 days from formation for filing. Failure to timely provide BOI could result in severe civil and criminal penalties.

The law was implemented to guard against money laundering and terrorist activity. It’s supposed to build a database of information for law enforcement to “crack down on anonymous shell companies, which have long been the vehicle of choice for money launderers, terrorists, and criminals.” This information is not publicly available, but accessible only to law enforcement agencies, national security agencies, and financial institutions for investigations.

On March 1, 2024, a federal district court judge in Alabama held that the law was unconstitutional by granting a motion for summary judgment. In response to the ruling, besides appealing, FinCEN released a public statement that they were relieving the plaintiffs in that case from any penalties for failing to file, but that all other reporting companies were still required to report even in light of the judicial opinion. A notice of appeal was filed on March 11, 2024.

With the narrow scope of the ruling, the statement from FinCEN, and the appeal, any company or person that was not a plaintiff to the case or members of the NSBA as of March 1, 2024 is still subject to the CTA.  Individual circumstances may vary, but companies should generally be prepared to meet any timelines for filings required by the CTA.

Easter Sunday, March 31, 2024 is 90 days past January 1, 2024 and was the first possible deadline for filing. Although the current applicability and enforcement of the CTA is in flux, we believe it is prudent to file in accordance with the CTA. The decision has already been appealed by the government and failure to comply may result in civil and criminal penalties for anyone that was not a plaintiff in that case.

Picture on the top is by Markus Winkler and is in the public domain.

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