Let's Work Together! Call us Now!
(786) 788-8756 | (786) 788-8982

Let's Work Together! Call us Now! (786) 788-8756 | (786) 788-8982

  • Published: June 30, 2022
  • Section 6403 (a)(b) of the CTA required that, starting in 2022, newly formed U.S. corporations, limited liability companies, and certain other entities classified as a “reporting company” must report their beneficial ownership to FinCEN at the time of formation or registration. Pre-existing reporting companies (those formed before the effective date of the CTA regulations. Changes in reported information will also be subject to the reporting requirements.
  • Reporting Company: CTA 6503 (a)(11) defines a “reporting company” as a corporation, limited liability company, or “other similarly entity” that is created by the filing of a document with a secretary of state of similar office under the law of a U.S. state (including any U.S. commonwealth, territory or possession of the U.S.) or a foreign country and registered to do business in the U.S. by the filing of a document with such office.
  • The reporting company must provide to FinCEN each beneficial owner’s name, date or birth, current residential or business address, and a unique identifying number from an acceptable, non-expired identification document (such as a U.S. state driver’s license or a U.S. or foreign passport).
  • CTA 6403 (a)(c) provides that beneficial owner information reported to FinCEN is not to be public information, and is to be kept confidential in a secure, private database.
  • These penalties include monetary fines up to $10,000, two years in prison, or both. A limited safe harbor is provided for correcting inaccurate information within 90 days of submission.
  • Although general partnerships are specifically included in the CDD rules, the FBAR rules and GTOs, Title LXIV, 6502(d) of the AMLA clearly acknowledges that the CTA does not include a general partnership as a reporting company. It directs the controller general to conduct a study and report to Congress within two years on the consequences of the lack of beneficial owner information about partnerships, trusts, and other legal entities
    not included in the CTA.
  • In the author’s opinion, FinCEN will likely hold that federal tax status is irrelevant to status as a reporting company, even if the owner(s) of the electing entity would not be themselves reporting entities.
  • Statutory Trust: it seems likely that the CTA regulations will include as reporting companies business trusts, statutory trusts, common law business trusts, general cooperative associations, limited cooperative associations, real estate investment trusts, and any other form of current or future form of entity that the law of a relevant state or Indian tribe requires to file, with the secretary of state or similar officer tribal government, articles of incorporation, a state of qualification, a certificate, a declaration of trust or another form of public organic record the filing of which by the governmental body is required to form such entity,
  • Common Law Trusts: As noted above for general partnerships, Title LXIV, 6502(d) of the NDAA clearly acknowledges that the CTA does not include a non-statutory trust as a reporting company. Such trusts are to be included in the study required by 6502(d).
  • Who is the applicant?
    • “Applicant” as any individual who files an application to form a U.S. entity or registers or files an application to register a foreign entity to do business in the United States. A reporting company is required to identify an Applicant along with its beneficial owner, but it is not clear why, although the 2019 version of the CTA imposed the reporting duty on the applicant, rather than on the reporting company.
  • Reporting the beneficial ownership of newly formed entities beginning in 2022 and for previously formed entities in 2024, as well as identifying the applicant for each entity
SG Law Group.

At SG Law Group, we take pride in assisting our clients to navigate
even the most complex situations they seek our assistance with
Call Us Now - (786) 788-8756 | (786) 788-8982

Accessibility Close Menu
× Accessibility Menu CTRL+U