Effective January 1, 2024, the Corporate Transparency Act (CTA) will require companies formed through document filings with the relevant Secretary of State or registered according to foreign state regulations, operating in the USA, and not falling under any of the 5 exempt categories (Reporting Company), must submit “Beneficial Ownership Information” (BOI) to the Financial Crimes Enforcement Network (FinCEN), a division of the Department of the Treasury. This data comprises the names, dates of birth, residences or business addresses, and copies of identification documents for the beneficial owners of the Reporting Company.
The CTA defines a beneficial owner as any individual who, either directly or indirectly, through contracts, agreements, or other relationships, holds substantial control over the company or owns/controls a minimum of 25% of its corporate shares. Substantial control over a Reporting Company is deemed to be exercised by any individual who:
- Holds a senior officer position;
- Has the power to appoint or remove an officer or the majority of the Board of Directors;
- Has decision-making powers over significant business activities;
- Exercises any other form of substantial control.
Companies established before January 1, 2024, are required to file a Beneficial Ownership Information (BOI) report by January 1, 2025. For those formed during the calendar year 2024, the report can be submitted within 90 days of their formation and registration. Starting January 1, 2025, new companies must file the BOI report within 30 days of their establishment.
While we understand the objective of promoting financial transparency, it is crucial to emphasize that this new regulation differs significantly from the BE-12 Benchmark Survey requested for statistical purposes in the year 2023. The distinctions go beyond the required information, the recipient entity, and the scope, encompassing applicable sanctions as well.
Failure to report or the submission of false information may result in civil penalties of up to $500 per day or criminal penalties, including imprisonment for up to two years and a fine of up to $10,000, imposed on the senior officers of non-compliant companies.
Attorney Bartolomeo Pizzoli