Corporate Transparency Act: Beneficial Owner Reporting Requirements, Penalties, FinCEN Proposed Rules

Recording of a 90-minute CLE video webinar with Q&A

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Conducted on Thursday, March 24, 2022

Recorded event now available

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Course Materials

This CLE course will provide corporate counsel with guidance on the Corporate Transparency Act of 2021 (CTA) requirements, which will create a beneficial ownership registry within the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). This new legislation requires millions of "reporting companies" to report information on their "beneficial owners" to FinCEN and sets forth both civil and criminal penalties for those owners that fail to comply.

Description

Beginning Jan. 1, 2022, the CTA will require certain private companies to disclose their "beneficial owners" to the U.S. Department of the Treasury's FinCEN. Companies formed on or after the date regulations are adopted must report when created. Companies formed before rules are effective will have an extended period to file their initial reports. The CTA explicitly covers LLCs and corporations as well as similar entities.

The CTA defines who must report and what must be reported. The regulations are in development to determine measuring ownership, who is in control, and how to view multi-tiered companies and related parties. Rules should also address supplemental reporting when there are ownership changes or changes in control of a private company.

There are numerous exemptions for various types of organizations. Nevertheless, the CTA may create a substantial burden on investors and small business owners. Counsel must advise clients on when reporting is required and how to make proper filings

Counsel should be aware of compliance regulations because the potential penalties are substantial. In addition to fines, the CTA includes the possibility of imprisonment for filing false reports or willfully failing to file.

In December 2021, FinCEN proposed additional rules to address who must report beneficial ownership information, when they must report, and what information they must provide. Collecting this information and providing access to law enforcement, financial institutions, and other authorized users will diminish the ability of malignant actors to hide, move, and enjoy the proceeds of illicit activities. FinCEN has stated its objective to take aggressive action against those who exploit anonymous shell corporations and front companies.

Listen as our expert panel discusses compliance provisions of the CTA and best practices for businesses subject to this new law and what further steps the new administration and Congress may take related to anti-money laundering objectives.

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Outline

  1. Background and Purpose of CTA
  2. “Reporting Companies” and Obligations to Report
  3. Exemptions from CTA’s Reporting Obligations
  4. Penalties and Enforcement Landscape
  5. Practical Considerations for Impacted Companies and Industries
  6. Preparing for Implementation of the CTA
  7. Upcoming Regulatory Actions

Benefits

The panel will review these and other relevant issues:

  • What reporting requirements does the CTA include?
  • Who is exempt from the reporting requirements?
  • What are the penalties for noncompliance?
  • When are CTA regulations likely to be finalized?

Faculty

Jauregui, Eddie
Eddie A. Jauregui

Partner
Holland & Knight

A former federal prosecutor, Mr. Jauregui focuses on internal corporate investigations, corporate compliance and...  |  Read More

Racco, Luciano
Luciano Racco

Counsel; Co-Chair, Trade Sanctions & Export Controls Practice
Foley Hoag

Mr. Racco advises clients on a wide range of international trade regulations, including sanctions and export controls...  |  Read More

Smith, Gabriela
Gabriela N. Smith

Partner
Klemchuk

Ms. Smith is an experienced business attorney who assists her clients with international contractual and regulatory...  |  Read More

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