Updated on November 29, 2023
An interview with CSC Associate General Counsel Paul Hodnefield
The Corporate Transparency Act (CTA) legislation introduces beneficial ownership reporting requirements for new and existing companies. The new CTA reporting requirements apply to corporations, limited liability companies, and other entities that fall within the CTA’s definition of “reporting company.” The beneficial ownership information will be collected and accessed through the Financial Crimes Enforcement Network (FinCEN), a branch of the U.S. Department of the Treasury.
The CTA goes into effect on January 1, 2024, leaving impacted organizations with many questions, including how best to track the information required. CSC sat down with CSC’s associate general counsel, Paul Hodnefield, to clarify the information currently available from FinCEN.
Why does my company need to report beneficial ownership information to the U.S. Department of Treasury?
Unless a company falls within one of the numerous exceptions to the definition of “reporting company,” it must report beneficial ownership information to FinCEN so law enforcement has access to the information to aid in money laundering and terrorist financing investigations.
When do the new reporting requirements take effect?
Beginning on January 1, 2024, all newly formed reporting companies will have to report the required information to FinCEN within 90 days of formation. Reporting companies already in existence as of December 31, 2023 will have until January 1, 2025 to report the required information to FinCEN. Foreign companies doing business in the U.S. will also have similar requirements. Foreign reporting companies registered in the U.S. before January 1, 2024 have until January 1, 2025 to report this information. Any foreign reporting company that registers in the U.S. after January 1, 2024 must report to FinCEN within 90 days of registration.
What information will a reporting company need to report about its beneficial owners?
The following information must be provided for each beneficial owner: (i) full legal name; (ii) date of birth; (iii) current residential or business street address; and (iv) a unique identifying number from an acceptable identification document. In addition, the reporting company must provide a legible image of the identification document corresponding to the unique identifying number.
What information will a reporting company have to report about itself?
The following information must be provided for each reporting company: (i) full legal name of the reporting company; (ii) all trade names, fictitious names, or doing business as (DBA) names, regardless of whether the name is registered; (iii) street address of principal place of business; (iv) jurisdiction of formation (state or tribal); and (v) IRS taxpayer identification number (TIN).
Does my company have to report company applicants, and what information is required?
If your company is formed on or after January 1, 2024 and falls within the definition of a reporting company, it will need to report information about itself, all beneficial owners, and up to two company applicants.
The final FinCEN rule defines “company applicant” as an individual natural person who either (i) directly files the document to create a domestic reporting company or register a foreign reporting company; and (ii) is primarily responsible for directing or controlling such filing if more than one individual is involved in the process.
When, where, and in what format will the information need to be reported?
Reports will be submitted electronically using an online interface called the Beneficial Owner Secure System (BOSS), which is still under development by FinCEN.
Where will the reported information be stored and who will have access?
FinCEN will store and maintain all reported information in its BOSS system with limited exceptions; information may only be disclosed to government law enforcement, prosecutors, the courts, and national security agencies. Financial institutions may have access to the information for due diligence purposes with consent of the reporting company. In some cases, the information may be disclosed if requested by a federal agency to assist the law enforcement, courts, prosecutors, or judges of a foreign country.
Are there any integrations currently available to FinCEN’s reporting platform?
No. Competitors may assert they can integrate, but they cannot at this time. They may have integrations in other FinCEN systems, but the BOSS system is entirely new and still in development. Consequently, we don’t know when or if FinCEN will allow any third party to build a direct interface.
CSC will continue to provide updates on this law as more information is made available from FinCEN.
Additional resource support available
For more information regarding the Corporate Transparency Act, please reference our CTA resource page. Additionally, Paul provided a high-level overview of the CTA in a recent webinar, available for viewing on-demand.
For other questions, please email us at corpservices@cscglobal.com.
Paul Hodnefield is associate general counsel for CSC, where he’s responsible for advising the company regarding real estate recording, notary, uniform commercial code, and other public record transaction services. Paul is a member of the ABA, the Minnesota Bar Association, and a fellow of the American College of Commercial Finance Lawyers. He’s a 2013 recipient of a National Association of Secretaries of State Medallion Award.