The Corporate Transparency Act (CTA) is a law enacted by the United States Congress in 2021 that requires certain corporations to report information about their beneficial ownership to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department.Under the CTA, corporations that are formed or registered to do business in the United States must submit to FinCEN information about their beneficial owners, which includes individuals who directly or indirectly own or control 25% or more of the ownership interests in the corporation or who otherwise exercise substantial control over the entity.
The information required to be reported under the CTA includes the beneficial owner’s name, date of birth, address, and identification number, such as a social security number or passport number.
The CTA is intended to help prevent money laundering, terrorism financing, and other forms of financial crime by increasing transparency about the ownership and control of corporations. By requiring corporations to report information about their beneficial ownership to a government agency, the law aims to make it more difficult for criminals and other bad actors to hide their illicit activities behind anonymous shell companies.
The CTA imposes penalties for non-compliance with the reporting requirements, including fines and imprisonment for willful violations. However, the law also includes provisions to protect the privacy and security of the information reported to FinCEN, such as limitations on the use and disclosure of the information and requirements for data security safeguards.
The CTA has numerous implications for small business owners and can inadvertently cause numerous hardworking people to incur severe penalties if they fail to meet their reporting requirements. We at Seddiq Law Firm, PLLC are here to help you navigate and comply with the requirements of the CTA.
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