The Corporate Transparency Act
The Corporate Transparency Act (“CTA”) was enacted on January 1, 2021 as part of the National Defense Authorization Act for Fiscal Year 2021. Though included as part of a larger legislative package largely unrelated to the CTA, the passage of the Corporate Transparency Act represents a major change in the way many businesses and organizations (both U.S. and non-U.S.) will need to report to the federal government on their structure and beneficial owners. With regulations to be finalized by the Financial Crimes Enforcement Network- the agency responsible for the CTA’s implementation and enforcement- the Act will affect many types of businesses and private holding company structures. Notably, it will apply to both newly formed companies and, after a phase-in period, those already established.
At the heart of the Corporate Transparency Act is the reporting of an organization’s “beneficial owner(s)” – both domestic and international. With all landmark pieces of legislation there will be plenty of gray areas to be defined and precedents to be set as its implementation begins. The CTA will impose new compliance burdens on many U.S. entities and non-U.S. entities. Wherever possible, potentially affected entities should begin preparing for CTA compliance, and do so with the assistance of competent counsel.
APRIL 2022 - The Financial Crimes Enforcement Network (FinCEN) announced the renewal and expansion of its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate.