Under this law, certain U.S. and foreign businesses must now share details about their beneficial owners. These are individuals who have substantial control or own a significant portion of the company. They have to disclose this information to the Financial Crimes Enforcement Network (FinCEN).

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Who Needs to Report?

The CTA casts a wide net, applying to corporations, limited liability companies (LLCs), and other entities created by filing with a state office or registered to do business in the U.S. However, it exempts entities such as public companies, financial institutions, and others already under substantial regulatory scrutiny, or meeting specific criteria related to their operational and financial size​​​​​​.

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What Information Must Be Reported?

Entities covered under the CTA are required to provide detailed personal information for each beneficial owner and company applicant, including names, birth dates, addresses, and identification numbers. A beneficial owner under the CTA is defined as anyone who directly or indirectly has substantial control over the entity or owns at least 25% of its ownership interests​​​​.

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Reporting Deadlines

The deadlines for reporting beneficial ownership information vary depending on when the entity was formed or registered. Entities formed or registered before the CTA's effective date have until January 1, 2025, to file their initial report, while those formed or registered afterward have different deadlines based on the specific dates of formation or registration​​.

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Penalties for Non-compliance

The CTA imposes severe penalties for failing to comply with its reporting requirements. Entities and individuals can face civil fines up to $500 per day, not exceeding $10,000, and criminal penalties, including imprisonment for up to two years for non-compliance or providing false information​​​​.

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Access to Reported Information

Beneficial ownership information collected under the CTA will be stored in a secure, non-public database FinCEN maintains. Access to this information is strictly regulated, available only to federal and state law enforcement agencies, financial institutions for due diligence purposes, and, under specific conditions, to foreign law enforcement entities.

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