The CTA was enacted in 2021 as part of the Anti-Money Laundering Act of 2020 and is administered by the Financial Crimes Enforcement Network (FinCEN), which is a unit of the Treasury Department. The general policy purpose of the CTA is to make it more difficult for individuals or entities to use corporate entities to mask a beneficial ownership interest in a company. The Congressional intent behind the CTA is to ferret out shell companies often used in connection with financial crimes like money laundering and terrorism financing. But the CTA's effect is, in practice, far more reaching, and thousands of legitimate businesses, from small mom-and-pop operations to large corporations with hundreds of employees, are required to file Beneficial Ownership Information Reports. Such companies doing business in the United States are “reporting companies” within the meaning of the law and are required to comply with the CTA. A reporting company is required to submit a Beneficial Ownership Information Report (BOIR) with FinCEN that discloses information about the company's true beneficial owners.
Certain companies are exempt from BOIR filings, but many companies that do business in the United States will be required to file a BOIR and update the information when the company experiences material changes to any information previously disclosed on a BOIR. Failure to comply with the CTA's filing requirements can carry painful financial penalties of $500 for each day of non-compliance or, in egregious cases, can result in criminal penalties of up to $10,000, or two years' imprisonment. Ketcham Law PLLC can help companies determine if they are required to file a BOIR and, if so, gather the necessary information and execute the BOIR filing on the company's behalf.
Important: The deadline for filing a BOIR with FinCEN pursuant to the CTA is January 1, 2025 for reporting companies that were formed prior to January 1, 2024. For reporting companies established after that date, a BOIR must be filed within 90 days from the date on which the company was formed. Please contact us right away if you have questions about whether your business is a BOIR reporting company or if you need assistance with any aspect of CTA filing compliance.
