Next year, on January 1, the Corporate Transparency Act (CTA) is scheduled to go into effect and requires business entities (other than those exempted) to file beneficial ownership information (BOI) reports. The reports must be filed with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), with limited access to the filings by others, and even then, only for specific purposes.
If you are unaware of the CTA, it is part of the Anti-Money Laundering Act of 2020 and promulgated to combat money laundering, terrorism financing, tax fraud, human trafficking, and other illicit activities. See the FinCEN Fact Sheet for a summary of the CTA’s core requirements, available here. Government agencies expect the CTA to help prevent bad actors from using complex corporate structures and shell companies to hide their identities and move money through the U.S. financial system. This would be done by providing law enforcement with information concerning the beneficial ownership of certain entities to detect, prevent, and punish terrorism, money laundering, and other misconduct through business entities.
Initial filings for some of you, if you are subject to the CTA, are due in early 2024, and not being ready may result in stiff penalties, not to mention potential reputational harm to your practice and your clients. And while lawyers may want to focus on the Act’s sweeping requirements for their clients, they may be surprised to learn that the CTA might apply to them. You read that correctly. While lawyers and law firms typically get a pass on significant regulations, that is not necessarily true under the CTA. Lawyers and law firms are not specifically exempt and still must determine if they qualify for one of the CTA’s 23 exemptions appropriate to their practice.
So, if you have not started your assessment of the CTA –do not panic. We invite you to join us for an upcoming complimentary webinar, “The Corporate Transparency Act – Are lawyers ready for this important regulation?” We will provide further guidance on the CTA and preview a CTA workflow prototype that can help you with your compliance needs.
We will be joined by two regulatory compliance experts, Rudy Gerlich and Patty Tehrani, to cover the following:
Make sure to join us by registering for Neota’s upcoming webinar to get current on these new requirements and how Neota can help. Here’s information on how to register.
