As a result of the January 2021 Corporate Transparency Act, privately held US entities (LLCs, partnerships and corporations) and certain foreign companies doing business in the US will be required to report information to the US Treasury (FinCen) about their beneficial owners. This legislation aims to prevent money laundering, terrorism and other illicit activities and to enable international cooperation.
As of January 1, 2024, all existing US LLCs, partnerships and corporations will have until December 31, 2024 to complete the registration requirement. All new entities formed from January 1, 2024 onwards will have 30 days from the date of incorporation to file relevant FinCen information.
Once a company’s initial report is filed, any changes or corrections must be filed on an ad hoc basis within 30 calendar days of the date of the changes. There will be no need for an annual or periodic ‘confirmation’ report.
Beneficial owners as defined in the Law refers to:
• The individual who exercises “substantial control” over the entity; or
• The individual who, directly or indirectly, through any contract, agreement, understanding, relationship or otherwise owns twenty-five percent (25%) or more of the equity interests of the relevant company (for example, equity interest in an LLC or shares of a corporation).
Who will be able to access the information?
• US federal law enforcement
• U.S. government agencies at the request of foreign law enforcement
• Financial Institutions in the United States, if the customer has consented to the database being consulted.
• No automatic exchange of information with foreign governments is foreseen in the legislation.
What will be disclosed about each beneficial owner?
• Full legal name
• Date of birth
• Current home or business address
• Unique identification number of an acceptable identification document, for non-US residents, will be a passport or other government ID.
What else will be reported?
• Cool name
• Main place of business
• Jurisdiction of training and registration
• Tax Identification Number of the entity
Penalties for Noncompliance: Failure to comply ranges from $500 per day, up to $10,000 and/or up to two years in prison.
If you have further questions about this new requirement, please contact us.
