What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) is a new federal law enacted to combat illegal activities such as money laundering, terrorism financing, and other forms of corruption. It requires certain businesses to report detailed information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), part of the U.S. Department of the Treasury. The goal is to increase transparency in corporate structures and prevent the misuse of legal entities.

Who Must File?

The CTA mandates that most corporations, limited liability companies (LLCs), and similar entities formed or registered to do business in the United States must file beneficial ownership information. This includes:

  • Domestic entities: Corporations, LLCs, and other similar entities created by filing a document with a secretary of state or similar office.
  • Foreign entities: Corporations, LLCs, and other similar entities formed under the laws of a foreign country and registered to do business in the U.S.

Exempted Entities

Certain entities are exempt from filing under the CTA due to their inherent transparency or regulation. These include:

  • Publicly traded companies
  • Governmental authorities
  • Banks and credit unions
  • Insurance companies
  • Investment companies and advisors registered with the SEC
  • Certain regulated entities, including accounting firms
  • Tax-exempt entities under section 501(c) of the Internal Revenue Code
  • Large operating companies meeting specific criteria (more than 20 full-time employees, more than $5 million in gross receipts or sales, and a physical office within the U.S.)