On January 1, 2024, the Corporate Transparency Act (CTA) went into effect, requiring numerous domestic and foreign companies to file ownership identification reports with the U.S. Department of Treasury’s Financial Crimes Enforcement Network.

Companies will be required to report information relating to “beneficial owners” and “company applicants,” among other information. Some companies may fall within exceptions to CTA reporting obligations, and the term “beneficial owner” does not include certain individuals such as minor children, agents of owners, employees with control solely from their employment, and individuals with ownership only through future inheritance or a creditor. As a result, information regarding such owners will not need to be reported.

Existing companies have until January 1, 2025, to comply with the CTA reporting requirement, while companies formed after January 1, 2024, may have as few as thirty days to file. Willful violations could result in a civil penalty of $500 per day, a fine of up to $10,000, and up to two years imprisonment.