The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) is set to gain significant insights into Corporate America’s ownership structures, thanks to the recent enactment of the Corporate Transparency Act. Attorney Ryan McCall explains that this law, part of the National Defense Authorization Act for Fiscal Year 2021, addresses the longstanding issue of companies with anonymous owners, which poses risks of money laundering and terrorist financing.
Effective this month, the law requires LLCs, corporations, and other entities to submit Beneficial Ownership Information reports, disclosing basic details such as taxpayer ID, name, and address. The aim is to prevent financial crimes like money laundering and terrorism financing. The Treasury will compile these reports into a database for access by law enforcement, courts, and financial institutions.
Businesses formed in 2024 must file their reports within 30 days, while older businesses have a year. Non-compliance carries severe penalties, including daily civil fines and potential criminal charges. McCall advises businesses, particularly small owners, to ensure compliance with this straightforward but crucial reporting requirement.
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