The U.S. Congress recently passed the Corporate Transparency Act (“CTA”) as part of the 2021 National Defense Authorization Act. The CTA requires certain business entities (including privately held business entities and certain non-profits) to report their direct and indirect human beneficial ownership information to the U.S. Department of Treasury.
The CTA is intended to combat the use of “shell” companies in the commission of money laundering, financial fraud and other domestic and international illicit activity and corrupt practices. However, the reach of the CTA is much broader, and includes incorporators, organizers, financial institutions and others dealing with many U.S. business entities, including with regard to existing business entities formed prior to the CTA’s enactment.
Under the CTA, reporting companies must provide the Financial Crimes Enforcement Network of the Department of the Treasury (“FinCEN”) a report identifying each applicant (i.e., incorporator or organizer) and each human beneficial owner who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise:
(i) exercises substantial control over the reporting company, or
(ii) owns or controls not less than 25 percent of the ownership interests of the reporting company.
Such identification must include the applicant’s or beneficial owner’s
- full legal name;
- date of birth;
- current residential or business street address; and
- unique identifying number from a prescribed identification document (such as a driver’s license) or a FinCEN issued identifier number.
The CTA also establishes corresponding reporting, records retention and information dissemination requirements, obligations and safeguards of the Department of Treasury.
This is an important piece of legislation with legal implications for many businesses, including those in the home care industry. NAHC urges you to read THIS ANALYSIS of the legislation and what it could mean for you.