In passing the Corporate Transparency Act January 1, Congress made the first major update to U.S. money-laundering laws in 20 years.
While not-for-profits and larger and strictly-regulated companies which already report activities are exempt, your small corporation, LLC, or similar entity is not.
Starting in January 2022, Congress’ deadline for issuing regulations, you will have to file “beneficial ownership” with the Financial Crimes Enforcement Network (FinCEN) if you “exercise substantial control over the company” or own or control at least 25 percent of the ownership interests of the company. There are a few exceptions: minors, nominees/agents, employees who only have control in relationship to their employment, people who hold own a right of inheritance, and creditors who are not beneficial owners.
If you don’t file on time, be prepared to pay a civil penalty of up to $500 per day and risk imprisonment. Don’t worry- these kinds f penalties are commonly included in such laws but are not enforced for innocent mistakes. Still, it shows how serious Congress is.
Be certain to keep up-to-date on the reporting requirements.
