FAQs

  • Enacted in 2021 and placed into effect on January 1, 2024, the CTA aims to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market. Under the new legislation, businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), providing details identifying individuals who are associated with the reporting company.

  • Companies obligated to report are called “reporting companies.” The list includes LLCs, corporations, or any other entity created by filing a document with a Secretary of State in any state. Your company is a reporting company unless it qualifies for an exemption.

  • A beneficial owner is an individual who, whether directly or indirectly, exerts substantial control over the reporting company, or holds or governs an ownership stake of at least 25% of the company.

  • If the individual fits into any of the specified categories, the individual is deemed to be exercising substantial control. These categories include being a senior officer, such as the president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any comparable role. Additionally, if the individual possesses the power to appoint or dismiss specific officers or a majority of directors of the reporting company, the individual is considered to be exerting substantial control. Furthermore, if the individual serves as a pivotal decision-maker for the reporting company, the individual is considered to have substantial control.

  • For companies created after December 31, 2024, the BOI Report must include information on one or two company applicants. The first is the person directly initiating the submission of the document that establishes or registers the company. The second is the individual primarily responsible for directing or overseeing the filing when multiple individuals are involved in the process. Not all companies will have two company applicants.

  • Key details required include the entity’s name, any trade or DBA names, state of formation, federal EIN, ID number from its domicile Secretary of State, the entity’s primary address within the US, full legal name of each beneficial owner, unique identifying number from an acceptable identification document, and a copy of the individual’s driver’s license or passport.

    • Existing Reporting Companies:

      • For companies created or registered to conduct business in the U.S. before January 1, 2024, the reports are due by January 1, 2025.

    • New Reporting Companies:

      • For companies created or registered to conduct business in the U.S. on or after January 1, 2024 and before January 1, 2025, the reports are due 90 calendar days after receiving actual or public notice that the company's creation or registration is effective.

      • For companies created or registered to conduct business in the U.S. on or after January 1, 2025, the reports are due 30 calendar days after receiving actual or public notice that the company's creation or registration is effective.

    • Failure to adhere to beneficial ownership reporting obligations could lead to civil and criminal penalties including $10,000 fines, penalties of $591 a day, and/or up to two years in jail.

  • BOI Reports need to be updated on two different occasions:

    1. A change of information: Any information that has been submitted in a previous report needs to be changed if it is no longer correct. This includes information about the declared beneficial owners as well as all the information given about them, such as names, addresses, and ID numbers.

    2. If an error occurs in the information: If there is a typo or incorrect information, then a new report needs to be submitted. In both cases the new report must be submitted within 30 days.

  • Twenty-three distinct types of entities are exempt from the reporting obligations for beneficial ownership information. The exemptions include publicly traded companies that meet specific requirements, numerous nonprofits, and certain large operating companies.