On September 29, 2022, the Department of Justice Financial Crimes Enforcement Network (FinCen) issued a final rule implementing the beneficial ownership information reporting provisions under the Corporate Transparency Act (CTA). Under the CTA:

• Each domestic or foreign company (other than a publically traded company, tax-exempt entity, general partnership, trust, or other domestic entity that does not have to file organizational documents with a secretary of state or tribal jurisdiction) must file a report with FinCen disclosing the following information about each individual who exercises substantial control over the company or controls or owns at least 25% of the company: the individual’s name, birthdate, address, and unique identifying number from an acceptable identification document, along with a copy of that document.

• A company formed before January 1, 2024, must file its initial report on or before January 1, 2025.

• A company formed after December 31, 2023, must file its initial report within 30 days after the company is formed.

• Any person who files documents forming a company (or registers a foreign company to do business in the U.S.) after December 31, 2023, (with that person referred to as a “company applicant”) must also file a report with FinCen disclosing his or her name, birthdate, address, and unique identifying number from an acceptable identification document, along with a copy of that document.

• Reporting violations carry penalties of up to $500 per day that the violation continues or has not been remedied up to $10,000 and up to 2 years in prison.

• The information reported to FinCen is intended to be maintained in a “secure, nonpublic database.”

All companies should be aware of the new federal requirements under the CTA. Kemp Smith’s business attorneys are continually monitoring and evaluating these new regulations and are readily available to advise clients on these new requirements as they become available.