With the bipartisan support of the U.S. Chamber of Commerce and law enforcement at both the state and federal levels, the Corporate Transparency Act (“CTA”) was approved by Congress with a veto-proof majority in December 2020. The CTA requires corporations and limited liability companies to disclose to law enforcement and others with legally mandated anti-money laundering responsibilities (e.g. financial institutions) information on who is the real, natural person (beneficial owner) who owns and controls an entity at the point of formation and update such information upon any change.
- The name, address, date of birth and driver’s license or other identification number for the beneficial owner is required
- The information will be reported to the U.S. Treasury’s Financial Crimes Enforcement Network
- Federal, state, local and tribal law enforcement will have access to the information
- Financial institutions with legally-mandated anti-money laundering obligations will have access with customer consent
- Change in ownership will require updated reporting
- There are civil and criminal (felony) penalties, including fines and imprisonment.
Not only can this information be used to combat money laundering, but also terrorism, human trafficking, drug trafficking, and tax evasion, that is, the use of anonymous corporate structures to move and conceal illicit wealth. However, disclosing this information to law enforcement and others will place a new requirement on corporations and LLCs which they have not been burdened with previously.
For more information, please contact your White Collar law counsel at Smith, Gambrell, & Russell, LLP.