Corporate Transparency Act (CTA)

The Corporate Transparency Act (CTA) was enacted in 2021 and enforcement begins January 2024 or January 2025, depending on the date of formation or registration of your business entity. The purpose of the CTA is to address issues related to the misuse of corporate structures for illicit purposes, such as money laundering and fraud.

The impact of the CTA on your business depends on various factors, including the size of your business, its structure, and its ownership.

CTA Reporting Entities Affected

The CTA requires certain companies to report information about their beneficial ownership to the Financial Crimes Enforcement Network (FinCEN), which is part of the U.S. Department of the Treasury. The Act primarily targets “reporting companies,” which include corporations, limited liability companies (LLCs), and similar entities. However, certain entities such as publicly traded companies, certain financial institutions, and entities already subject to robust reporting requirements may be exempt.

Businesses falling under the reporting requirements will need to disclose information about the individuals who directly or indirectly own or control a significant portion of the company.

CTA Beneficial Ownership Disclosure

If your business is a reporting company, you will need to disclose the identities of beneficial owners, including their names, addresses, dates of birth, and identification numbers. Beneficial owners are individuals who directly or indirectly either own 25% or more of the ownership interests in the reporting company or exercise substantial control over a reporting company (like company officers).

Financial institutions, including banks, will likely be affected as they play a crucial role in implementing the CTA’s requirements. They may need to adjust their due diligence processes to incorporate the newly available beneficial ownership information when onboarding clients.

CTA Privacy and Security Concerns

As beneficial ownership information becomes more readily available, law enforcement and regulatory agencies may have better tools to investigate and prevent illicit activities.

As a business owner, you may be concerned about privacy and the security of the information collected by a government agency (FinCEN). The CTA includes provisions to protect sensitive information and restricts access to authorized government personnel for specific purposes, such as combating money laundering and other financial crimes.

CTA Compliance Costs

If your business falls under the reporting requirements, you will need to adapt your compliance processes to meet the new obligations. This may involve implementing systems to collect and report beneficial ownership information to FinCEN.

Based on the size and complexity of your business, there may be compliance costs associated with gathering and reporting the required information. Smaller businesses may find the compliance process less burdensome compared to larger entities with intricate ownership structures.

Legal and Regulatory Compliance

It’s essential to stay informed about the specific reporting requirements and deadlines to ensure compliance with the law. Non-compliance may result in penalties, so it’s crucial to understand the obligations imposed by the CTA.


To fully understand how the CTA may affect your business and to ensure CTA compliance, contact Peter Donnelly at Donnelly Minter & Kelly for advice tailored to your specific situation. Mr. Donnelly has over 25 years’ experience in advising closely-held businesses, including corporations, limited liability companies, professional practices, and other entities and their owners on a variety of business issues, including structuring and negotiating business formations, and acquisitions and sales.


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