US Corporate Transparency Act 2025

The Corporate Transparency Act (CTA) is intended to combat the use of anonymous shell entities and opaque ownership structures used to facilitate illicit activities (e.g., money laundering, terrorism financing, tax fraud), by requiring identification of “beneficial owners” and “control persons” of entities formed in the US or formed abroad but registered to do business in any US state.

Each such entity (unless exempt) is required to file with the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury reports providing basic information about the company (e.g., legal name, principal address, state of formation, taxpayer ID #). Each reporting company must also disclose information about all of its “beneficial owners.” A beneficial owner is an individual who, directly or indirectly, either (A) owns at least 25% of the ownership interests or (B) exercises “substantial control” over the company. This would include individuals who (i) are senior officers, (ii) have authority to appoint or remove senior officers or a majority of the board of directors, or (iii) have substantial influence over important decisions regarding the company’s business, finances, structure, etc. The meaning of “substantial control” is vague and subject to broad interpretation. Most companies will need to report multiple “beneficial owners.” Determining who exercises “substantial control” and who is a “beneficial owner” can be difficult and highly subjective, depending on the facts and circumstances of each company. The CTA recently went into effect and interpretations of its requirements are few and slowly evolving. Therefore, it is advisable to consult knowledgeable legal counsel to assist with this important determination.

The following information must be provided about each “beneficial owner”: (i) full legal name, (ii) date of birth, (iii) residential address, and (iv) driver’s license or passport.

Entities exempt from CTA filing requirements include companies in certain highly-regulated industries (e.g., financial services), U.S. public reporting companies, and “large operating companies” which have (i) more than 20 full-time employees in the US, (ii) a physical office in the US at which business is regularly conducted, and (iii) more than $5 million in US sales as reported on its IRS tax return for the prior year.

Beneficial ownership Information reported to FinCEN may be disclosed for limited specified uses to (i) federal agencies engaged in national security, intelligence or law enforcement, (ii) financial institutions for customer due diligence (with customer consent), (iii) state, local and tribal law enforcement agencies for use in criminal or civil investigations (if authorized by the court), and (iv) foreign law enforcement agencies, prosecutors or judges (when requested through a US federal agency and for limited purposes).

Willful failure to report complete or updated information on “beneficial owners” or willfully providing false or fraudulent information could result in civil and criminal penalties.

Filing deadlines are (i) 30 days after creation or registration for entities formed in 2025 or later, (ii) 90 days after creation or registration for entities formed in 2024, and (iii) January 1, 2025 for entities formed or registered before January 1, 2024. However, due to recent legal actions challenging the CTA, FinCEN is currently prevented from enforcing the CTA and companies are not required to file reports at this time. Additional court rulings are expected in the next few months and the situation remains fluid. Therefore, it is recommended that you stay in touch with legal counsel for updates as the compliance requirements and filing deadlines could change on short notice.