By Theresa M. Skaine, Esq. and Arkley L. Mastro, Jr., Esq.
January 31, 2024
The Corporate Transparency Act (CTA) mandates new reporting requirements to disclose Beneficial Owners of Corporations and Limited Liability Companies. The new reporting requirements are designed to combat money laundering, tax evasion and drug trafficking by identifying the true beneficial owners of entities – the individuals who, directly or indirectly, exercise substantial control over or own a considerable portion of equity interests.
The CTA mandates that certain U.S. and foreign entities disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This information will be secured in a confidential database, accessible to federal law enforcement and, in certain cases, financial institutions conducting due diligence.
COMPLIANCE IS NOT OPTIONAL. Failure to provide accurate and prompt information may result in substantial penalties up to $5,000 or more for each violation and for each entity. It is crucial for you to take proactive steps now. Click here to learn more and to review registration requirements: www.fincen.gov/boi
Key Reporting Elements
The regulations require entities to identify individuals who have substantial control over or own a significant portion of the entity – including names, addresses, birth dates and social security numbers or passport information. It is critical that this information is submitted in a timely manner through the designated FinCEN electronic system for reporting (see link above). In some instances, entities will have only 90 days from formation to register.
The New York LLC Transparency Act
In addition to the above Federal legislation, New York State has passed the New York LLC Transparency Act (NYLTA) signed by Governor Hochul on December 22, 2023. This state-specific legislation complements the Federal CTA and applies only to LLCs operating within New York and will go into effect January 1, 2025.
The NYLTA mandates LLCs to disclose ownership information similar to the Federal requirements. The New York Department of State will maintain a public database of this information, with certain privacy safeguards. LLCs formed or operating in New York will need to prepare for these additional reporting requirements, ensuring compliance and alignment with both State and Federal Regulations.
Navigating the new regulatory requirements can be challenging. Our corporate team is available to provide guidance and support to assist your understanding and compliance with these new requirements.
Call us at (866) 951-7526 for more information