Apr 26, 2024 | ALI CLE, Business Organization and Corporate Law, The Practical Lawyer

The Corporate Transparency Act: A Must-Do List for the New Regulations | Jonathan B. Wilson | presented by ALI CLE

By now, lawyers with business and corporate clients should know that the Corporate Transparency Act (CTA) took effect on January 1, 2024. Non-exempt reporting companies formed on or after that date will need to file an initial beneficial ownership information (BOI) report within 90 calendar days after the date of formation.1 Non-exempt reporting companies existing prior to January 1, 2024 will have until January 1, 2025 to file their initial BOI reports. This deadline received little fanfare or attention in the media, however, and many lawyers (and law firms) have not yet adopted the procedures they need to prepare themselves and their clients for the sea change in practice that will follow the passage of this deadline.


Congress adopted the CTA as part of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021.2 The CTA includes some of the most significant changes to the Bank Secrecy Act (BSA) and US anti-money laundering (AML) laws in recent years. Those changes, in turn, will result in extensive changes to US corporate governance.

The CTA requires companies that are formed or registered to do business in the US to file a BOI report with the Financial Crimes Enforcement Network of the US Treasury Department (FinCEN). FinCEN will assemble the BOI reports into a massive database of BOI data. FinCEN has published regulations (the Reporting Rule) that govern the data required in BOI reports and the timing of those reports.3

The law requires FinCEN to use that database to fight money laundering in cooperation with other US law enforcement agencies. Although the FinCEN database will not be publicly available, FinCEN will make the database accessible to US law enforcement agencies, US financial institutions, and some non-US law enforcement agencies pursuant a proposed regulation that would govern access.4

The form of BOI report that reporting companies are to submit to FinCEN was not included in the Reporting Rule and an earlier proposed form of BOI report drew extensive criticism from both industry and Congressional advocates. Consequently, in September 2023, FinCEN published a proposed form of BOI Report (Proposed BOI Report Template) in a notice that was open for comment until October 30, 2023.5 Importantly, the Proposed BOI Report Template will require every field to be completed. If an individual tries to file a BOI Report with any field left blank, FinCEN will reject the submission.

However, in its September 2023 announcement of the Proposed BOI Report Template, FinCEN stated that it would have “a potential alternative implementation” that it might adopt that “would have the same response fields that require the same information to be reported” [but would] provide “a mechanism for filers to temporarily indicate if they are unable to provide certain information for certain reasons.”6 FinCEN specified this “alternative implementation” would contain:

a drop-down option in the Beneficial Owner(s) section that would allow filers to specify one of a few reasons why they are temporarily unable to provide a piece of information about a beneficial owner … Forms whose filers select a dropdown option will be accepted into the filing system but will still be considered incomplete and non-compliant filings. Forms will only be considered complete and compliant once the missing information is subsequently added, the drop-down option is removed from each field, and the form is updated. FinCEN will be seeking feedback from database users, including filers and law enforcement on these options.7

At the present time, practitioners cannot know if FinCEN will implement these alternatives. Prudence suggests, therefore, that practitioners should plan (and advise their clients) as if the Report Template that took effect on January 1, 2024 remains in effect.

Separately, FinCEN extended the deadline for filing an initial BOI report for entities formed on or after January 1, 2024, and before January 1,2025, to 90 days instead of 30 (which was the deadline in the earlier version of the regulations).8

Practitioners will need to remain aware of the potential for changes in these requirements as time passes.


The CTA, as implemented through the Reporting Rule, requires any domestic reporting company created on or after January 1, 2024 to file a report within 90 calendar days of the earlier of the date on which it receives actual notice that its creation has become effective. Alternatively, the domestic reporting company would have to file a report within 90 calendar days of the date on which a secretary of state or similar office first provides public notice, such as through a publicly accessible registry, that the domestic reporting company has been created.9

Similarly, any entity that becomes a foreign reporting company on or after January 1, 2024 must file a report within 90 calendar days after the earlier of: (i) the date on which it receives actual notice that it has been registered to do business; or (ii) the date on which a secretary of state or similar office first provides public notice, such as through a publicly accessible registry, that the foreign reporting company has been registered to do business.10

In contrast, both domestic reporting companies created before January 1, 2024 and foreign reporting companies that became foreign reporting companies before January 1, 2024 must file an initial report not later than January 1, 2025.11

Each reporting company that is not exempt must identify in its initial BOI report each of its “beneficial owners,” and provide five pieces of personally identifiable information about each of those beneficial owners.12 In addition, the initial BOI report must disclose the reporting company’s full legal name, any trade name or “doing business as” name, a complete current address, the state or jurisdictions of the reporting company’s formation, and the reporting company’s taxpayer identification number (TIN) including an Employer Identification Number (EIN) or, where a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction, and the name of that jurisdiction.13

For each beneficial owner of the reporting company, the reporting company must disclose in its initial report each beneficial owner’s: (i) full legal name; (ii) date of birth; (iii) residential street address; (iv) a unique identifying number (which may be a non-expired US passport, a non-expired identification document, such as a driver’s license, issued by a state, local government, or Indian tribe, or a nonexpired passport issued by a foreign government if the individual does not possess any of the other document types listed); and (v) an image file of the document that provides the unique identifying number.14

In addition, for reporting companies that are formed (or registered to do business in the US) after January 1, 2024, the initial BOI report must also include these same five pieces of information for the reporting company’s “company applicant.” The Reporting Rule defines “company applicant” as: (i) with respect to a domestic reporting company, “the individual who directly files the document that creates the domestic reporting company”; and (ii) with respect to a foreign reporting company, the individual who directly files the document that first registers the foreign reporting company.”15

If there is more than one individual responsible for the filing of the document that forms the domestic reporting company (or that registers the foreign reporting company to do business in the US), the “company applicant” is the individual “who is primarily responsible.”16

After a reporting company files its first BOI report, the company must amend its report within 30 calendar days after there is any change to the information required in that report.17

Each reporting company that is not exempt must follow the CTA’s definition of “beneficial owner” to identify its beneficial owners. The Reporting Rule defines “beneficial owner” as “any individual who, directly or indirectly, either exercises substantial control over such reporting company or owns or controls at least 25 percent of the ownership interests of such reporting company.”18

An individual who would otherwise be included as a beneficial owner may be omitted if they fall into one of the following categories: (i) a minor child; (ii) an individual acting as a nominee, intermediary, custodian or agent on behalf of another individual; (iii) an employee of a reporting company, acting solely as an employee (other than a senior employee); (iv) an individual whose only interest in a reporting company is a future interest through a right of inheritance; or (v) a creditor of a reporting company.19

The CTA exempts from the obligation to file a BOI report any reporting company that falls into any of 23 exemption categories.20 The exemption categories cover several classes of entity that are the subject of extensive regulation or that are otherwise required by law to disclose their ownership information to the government.

The CTA contains serious penalties for non-compliance. A reporting company that fails to file a BOI report (or a required amendment) when due is subject to a $500 per day fine, up to a maximum of $10,000. A willful failure to file a report when due or an intentional filing of inaccurate information is punishable as a felony by up to two years’ imprisonment. A willful violation in combination with other anti-money laundering violations can result in an amplified penalty of up to 10 years’ imprisonment.

CLICK HERE to read the full article. The prior version of this article appeared in the February 2024 edition of ALI CLE’s The Practical Lawyer.

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