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By Jay Thompson
contributing writer 

What is the Corporate Transparency Act?

Business Bitz

 

December 9, 2023

Jay Thompson.

The Corporate Transparency Act (CTA) is a piece of legislation aimed at increasing corporate transparency and preventing money laundering and other illicit financial activities. It was passed as part of the National Defense Authorization Act (NDAA) for Fiscal Year 2021 and signed into law on January 1, 2021.

Key provisions of the Corporate Transparency Act include:

1. Beneficial Ownership Reporting:

Under the CTA, certain corporations, limited liability companies (LLCs), and other similar entities MUST report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Beneficial owners are individuals who directly or indirectly own or control 25% or more of the entity's ownership interests.

2. Reporting Requirements:

Entities covered by the CTA must submit reports to FinCEN containing the names, dates of birth, addresses, and identification numbers (such as Social Security numbers) of their beneficial owners.


3. Access to Information:

The information reported to FinCEN is not publicly available but can be accessed by law enforcement agencies, financial institutions, and other entities for specific purposes, such as anti-money laundering investigations.

4. Penalties for Non-Compliance:

Failure to comply with the reporting requirements can result in civil and criminal penalties, including fines of $500 per day and imprisonment for non-compliance.

The Corporate Transparency Act is seen as a significant step in the fight against money laundering, tax evasion, and other financial crimes. It is intended to make it more difficult for individuals and entities to hide their identities behind shell companies and use them for illicit purposes. By requiring the disclosure of beneficial ownership information, the government aims to enhance transparency and make it easier for law enforcement to track and investigate suspicious financial activities.


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It's important to note that the specific implementation of the Corporate For the most up-to-date information and details on compliance requirements, you can contact us at the CSU Bakersfield Small Business Development Center (661) 654-2856 or find us online at http://www.csubsbdc.com.

 
 

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