The CTA - What are Your Compliance Obligations?

The Corporate Transparency Act added new section 5336 to the Bank Secrecy Act to enhance beneficial ownership transparency while minimizing the burden on the regulated community. The section requires certain types of domestic and foreign entities, called “reporting companies,” to submit specified beneficial ownership information to FinCEN. In certain circumstances, FinCEN is authorized to share this BOI with government agencies, financial institutions, and financial regulators, subject to appropriate protocols. The CTA's reporting requirements generally apply to smaller, more lightly regulated entities that are less likely to be subject to any other beneficial ownership reporting requirements. By contrast, the CTA exempts certain categories of larger, more heavily regulated entities from its reporting requirements. The final regulations provide more detail about the obligations of a reporting company under the CTA.

The CTA requires the reporting company to report the name, date of birth, address, and personalized identification document (like a passport or driver’s license) of each beneficial owner. Accordingly, it is important to understand the definition of beneficial owner. Generally, a beneficial owner is an individual who exercises substantial control over the company (such as a CEO, CFO or other officer or director who has certain authority over major decisions of the company). In addition, a beneficial owner is an individual who owns or controls at least 25% of the company, taking into account direct and indirect ownership interests.