A major new federal law will soon require small private companies in the United States to report details on their ownership and control structures to the government. This legislation called the Corporate Transparency Act (CTA) was passed in 2021 as part of broader efforts to combat financial crimes like money laundering and terrorism financing. 

Under the CTA, limited liability companies, corporations, and other small businesses will need to disclose information on their “beneficial owners” - the actual people who ultimately own or control the company - to the Financial Crimes Enforcement Network (FinCEN). This applies to both new and existing entities.

Companies already active before December 31, 2023 will have until January 1, 2025 to make their first report. However, firms established on or after January 1, 2024 must file within 30 days of formation. Additional reporting will be required for material changes in beneficial ownership.

While critics argue for full public access to ownership details, this federal registry will be confidential and available only to law enforcement. Supporters say it strikes the right balance between transparency and privacy.

This new disclosure requirement closes a major loophole that has allowed all kinds of criminal activity to hide behind shell companies with concealed owners. It will help regulators detect money laundering, terror financing, drug trafficking, human trafficking and other serious crimes.

The CTA represents a major step forward in combating the abuse of corporate entities for illicit purposes. Companies should review their ownership structure and be prepared to comply with new federal reporting rules in 2024 and 2025. Proper planning will allow businesses to meet CTA requirements smoothly.

For more information, contact Bill Richter Law at bill@richterlaw.com