The Wash Cycle is Done – Combating Money Laundering Through the Corporate Transparency Act
“Current U.S. law allows those seeking to hide their financial activities to form companies anonymously—without disclosing who ultimately owns and profits from them. That makes moving illicit funds into the U.S. financial system especially enticing for criminals and corrupt actors.”
Enacted January 1, 2021, the CTA mandates creation of a federal database of beneficial ownership information (BOI) to combat money laundering and end concealment of illicit money in U.S. shell corporations. The majority of U.S. businesses will be required to comply with this new law. In fact, under the law, the definition of “reporting company” is incredibly broad, and somewhat of a misnomer because “reporting company” includes corporations, limited liability companies (LLC) and limited liability partnerships (LLP), with a limited list of exceptions.
Late last year, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule on Beneficial Ownership Information Reporting Requirements (the “Reporting Rule”) to carry out provisions of the CTA. The Reporting Rule effectively bans anonymous shell companies used to launder money or hide assets.
Effective January 1, 2024, a reporting company must file BOI with FinCEN to identify both the beneficial owners of the entity and the company applicants of the entity. Under the Reporting Rule, a beneficial owner includes one 1) who directly or indirectly exercises substantial control over a reporting entity or 2) who owns or controls at least 25% of the ownership interests of that entity.
Reporting companies created or registered before January 1, 2024 will have one year (until January 1, 2025) to file their initial reports. Reporting companies created or registered after January 1, 2024 will only have 30 days after receiving notice of their creation or formation to file their initial reports. After filing the initial report, the reporting company is under a continuing obligation to provide updates to the BOI report within 30 calendar days of any changes in the BOI.
If you would like to schedule a consultation to discuss your business filings under the CTA, please feel free to contact Mary F. Ognibene at firstname.lastname@example.org or call her at 585-512-3520 or Letty Laskowski at email@example.com or call her at 585-512-3538.
 Remarks by Deputy Secretary of the Treasury Wally Adeyemo on Anti-Corruption at the Brookings Institution (Dec. 6, 2021), available at https://home.treasury.gov/news/press-releases/jy0516
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