Legislation Creates New Reporting Requirements to Prevent Money Laundering Schemes

  • NAHC comments on the Corporate Transparency Act HERE

The Corporate Transparency Act (CTA), passed on January 1, 2021 as part of the National Defense Authorization Act of 2021, aims to prevent money laundering and the financing of terrorism, and requires certain new and existing small corporations and limited liability companies to disclose information about their beneficial owners.

A beneficial owner is an individual who:

  1.  exercises substantial control over a corporation or limited liability company,
  2.  owns 25% or more of the interest in a corporation or limited liability company, or
  3. receives substantial economic benefits from the assets of a corporation or limited liability company.

When certain entities apply to form a corporation or limited liability company, they must file beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN).

Additionally, certain existing corporations and limited liability companies must file this information with FinCEN two years after the implementation of final regulations required under this division.

The CTA includes a number of exemptions to the reporting requirements which include:

  • companies that employ more than 20 full-time employees, has over $5 million in their most recent income tax returns, and has an operating presence at physical offices in the United States
  • companies that are heavily regulated
  • churches, charities, and not-for-profit organizations

The CTA addresses exemptions for regulated financial institution (e.g. banks and credit unions) but makes no mention of whether regulated health care organizations such as Medicare certified home health and hospice agencies or licensed home care agencies would be exempted industries.

On April 5, 2021 the Department of the Treasury issued an advance notice of proposed rule making requesting information on a multitude of areas related to the reporting requirements for companies under the CTA. One request for information was whether there are any categories of entities that are not currently subject to an exemption from the definition of “reporting company”, and if so why?

The National Association for Home Care & Hospice (NAHC) believes that federally regulated health care institutions, specifically Medicare certified home health care and hospice agencies, should explicitly be exempted from the definition of “reporting company”. NAHC submitted comments on the ANPRM to make the case for exempting home health and hospice providers enrolled in the Medicare, Medicaid, and/or CHIP programs, and home care providers subject to state licensure from the definition of “reporting companies” and not require these organizations to comply with the CTA reporting requirements.

In response to the request for comments in the advance notice of proposed rulemaking (ANPRM) for the implementation of the Corporate Transparency Act (CTA), NAHC submitted comments and recommendation regarding question number 7 in the ANPRM. You can read those NAHC comments and recommendations HERE.

The CTA requires the Department of the Treasury to promulgate regulations implementing the reporting requirement by January 1, 2022.