Effective January 1, 2024, all Reporting Companies must disclose information about the company and its Beneficial Owners to the Financial Crimes Enforcement Network (“FinCEN”) under the Department of Treasury. The purpose of the Act is to enhance national security, intelligence, and law enforcement efforts to combat money laundering, and other illicit activities. Importantly, this requirement is not related to tax reporting or the IRS.
The CTA deadlines are approaching fast as existing entities only have four months left for initial compliance. For entities formed or registered to do business in the U.S. before January 1, 2024, the initial reports must be filed with FinCEN by January 1, 2025.
Anyone who willfully provides false or fraudulent information, or willfully fails to report complete or updated Beneficial Ownership information faces significant penalties. These include civil penalties of $500/day if the violation continues or is not remedied, and criminal fines of up to $10,000, and/or up to two years imprisonment.
With the deadline approaching, it’s critical to start preparing now. Gathering the necessary Beneficial Ownership Information and navigating the legal complexities of the CTA can be challenging, so existing entities should be taking steps now to prepare for timely compliance.
The Blum Firm is actively engaged in helping clients with CTA Compliance, including filing the reports directly with FinCEN. Please contact us if you would like our assistance with CTA Compliance or if you have any questions about the impact of this law on your entities.
Please note that dissolving a Reporting Company before the compliance deadline will not allow you to escape the initial reporting requirements. FinCEN has recently clarified that unless an entity was dissolved and ceased to exist by the end of 2023, it must file a Beneficial Ownership Information Report with FinCEN.