The anti-money laundering law, known as the Corporate Transparency Act (CTA), follows a Dec. 23 court ruling requiring millions of small business owners to register with the Financial Crimes Enforcement Network (FinCEN) by mid-2020. It has now been re-enforced. January, or potentially pay a fine of up to $10,000.
The registration rule had been on hold since Dec. 3, when a federal court in Texas issued a preliminary injunction blocking its enforcement. But on Monday, the 5th Circuit Court of Appeals reversed the order, ruling that the decision was in the “objective public interest of combating financial crime and protecting our nation’s national security.”
The CTA is asking owners and co-owners of an estimated 32.6 million small businesses to register personal information, such as photo ID and home address, with FinCEN by January 1. Although the court’s ruling that enforcement can proceed may prompt many small and medium-sized businesses and owners to rush to register before the deadline, FinCEN announced on Dec. announced that it will be extended until January 13th.
“Reporting companies established or registered before January 1, 2024 must submit an initial beneficial ownership information report to FinCEN by January 13, 2025,” the agency said in a statement. Ta. “Otherwise, these companies would have had to report by January 1, 2025.”
Some business groups say the extension still doesn’t give business owners enough time to meet the deadline.
“We are extremely concerned that an extension of just two weeks will not give millions of American businesses enough time to comply with the law,” said Mark Eisele, president of the National Cattle and Beef Association. Mark Eisele, president of the National Cattle and Beef Association, said in a Dec. 12 letter to Treasury Secretary Janet Yellen. 24 characters. “We ask the Treasury Department for at least a one-year delay to allow for expanded education and support for small businesses across rural America.”
Some civil liberties groups also criticized the ruling, saying the restrictions amounted to government overreach.
“The government cannot allow this unconstitutional statute to remain in place,” the civil rights group New Civil Liberties Union said in a statement emailed to CBS MoneyWatch. exceeds.”
A spokesperson for FinCEN said in an email to CBS MoneyWatch that the Court of Appeals’ decision “underscores the importance and urgency of corporate transparency laws for national security.”
“The Corporate Transparency Act levels the playing field for tens of millions of law-abiding small businesses across the country and makes it harder for bad actors to exploit loopholes for unfair advantage,” a spokesperson said. added.
Here’s what you need to know about the ruling and CTA.
What is the Corporate Transparency Act (CTA)?
The CTA, an anti-money laundering law passed in 2021, monitors the inner workings of shell companies and prevents “criminals, organized crime organizations, and other illegal actors from trying to hide their identities and launder money through financial institutions. The purpose was to crack down on “attempts to do so.” system,” Treasury Secretary Janet Yellen said in 2022.
The rule, which first took effect in 2024, gives existing companies until January 1, 2025 to register, and companies starting this year have a 90-day deadline to register.
FinCEN is a bureau within the U.S. Treasury that investigates money laundering and other illicit financial activities.
What is CTA’s Beneficial Ownership Information Rule (BOI)?
According to the U.S. Chamber of Commerce, this reporting rule is the CTA’s Beneficiary Information Reporting Obligation (BOI), which requires small businesses to register with FinCEN:
Your company’s legal legal name. The company’s address (P.O. boxes or attorney’s offices are not accepted, the Chamber says). The state in which the company was incorporated or first registered. Identification documents, such as a taxpayer identification number and filed articles of incorporation. Beneficiary’s legal name and date of birth. Beneficiary’s home address. A copy of the beneficiary’s address. US driver’s license or passport.
When is the deadline to register with FinCEN?
As previously mentioned, companies incorporated or registered before January 1, 2024 have until January 13, 2025 to file their ownership information reports with FinCEN, instead of the original January 1, 2025 deadline. need to.
Other filing deadlines, depending on the date of establishment of the business, are:
Companies established after September 4, 2024 and with filing deadlines between December 3, 2024 and December 23, 2024 must submit to FinCEN by January 13, 2025.
Companies incorporated or registered in the United States after December 3, 2024 and before December 23, 2024 will have an additional 21 days to file with FinCEN beyond their original deadline.
Businesses eligible for disaster relief may have deadlines set after January 13th. Click here for additional deadlines.
How does a business register with CTA?
Small businesses can submit beneficial ownership information reports to FinCEN through this link.
What happens if I don’t register for CTA?
Fines for failure to file can be up to $591 per day, according to FinCEN.
The Chamber of Commerce notes that companies could face criminal penalties of up to two years in prison and fines of up to $10,000.
Which businesses are exempt from CTA filing?
According to the Chamber of Commerce and Industry, there are 23 types of companies that are exempt from reporting beneficial ownership information. These include some large industrial companies as well as many publicly traded companies and nonprofit organizations.
According to FinCEN, many types of banks and other financial services companies do not need to declare. Other types of businesses are also exempt, including many sole proprietorships, the report noted. (Click here for a list and Q&A regarding exemptions.)
What happens next in the CTA case?
Details are unclear, but groups opposing the regulations could seek relief from the U.S. Supreme Court or request additional review from the Fifth Circuit, according to the National Law Review.
contributed to this report.
