The Corporate Transparency Act: New Beneficial Ownership Reporting Requirements

The Corporate Transparency Act ("CTA") is a new U.S. federal law requiring most U.S. corporations, LLCs, and other entities, as well as similar non-U.S. entities registered to do business in the U.S., to report their beneficial ownership to the U.S. government.¹ These requirements are detailed, burdensome, and involve the disclosure of personal information, and, therefore, compliance will impose a cost to reporting companies and result in the erosion of the traditional anonymity afforded to beneficial owners of entities not currently required to report.

Initially, Congress enacted the CTA on January 1, 2021, as part of the Anti-Money Laundering Act of 2020.² Then, the Department of the Treasury's Financial Crimes Enforcement Network ("FinCEN") finalized the CTA's federal reporting requirements and published guidance on the CTA's final regulations, known as the "Reporting Rule."³ Under the CTA and the Reporting Rule, FinCEN is authorized to collect beneficial