In a previous blog post, we introduced you to a new law passed by congress called the The Corporate Transparency Act. If you missed the last post, you can read more on it here: https://accumera.com/corporate-transparency-act-cta/.
In this post we want to advise of potential Violations and Penalties, when to Start Reporting and Exemption Information.
Violations and Penalties
It is unlawful for any person to willfully provide, or attempt to provide, false or fraudulent information, or failure to report complete beneficial ownership information. This constitutes a violation of the CTA. Such violation may result in a civil penalty of up to $500 for each day the violation continues and criminal fines up to $10,000 and/or imprisonment for up to two years.
When do I need need to start reporting?
It is important to know that while the CTA does require the information to be submitted to FinCEN, the reporting requirement has not yet been initiated. FinCen is still working on its creation of a U.S. National Beneficial Ownership Database. They say it should be ready for launch and reporting could be required potentially in late 2022 or early 2023.
The CTA and FinCen exclude twenty-three types of entities from reporting. Many of these are companies that already provide information to a relevant government agency, heavily regulated companies, and larger companies. The Act specifically exempts entities such as:
Securities issuers, domestic governmental authorities, banks, domestic credit unions, depository institution holding companies, money transmitting businesses, brokers or dealers in securities, securities exchange or clearing agencies, other Securities Exchange Act of 1934 entities,132 registered investment companies and advisers, venture capital fund advisers, insurance companies, state licensed insurance producers, Commodity Exchange Act registered entities,133 accounting firms, public utilities, financial market utilities, pooled investment vehicles, tax exempt entities, entities assisting tax exempt entities, subsidiaries of certain exempt entities. As well as large operating companies or companies that employ more than 20 people (in the United States), report revenues of more than US $5 million on tax returns, and have a physical presence in the U.S., and inactive businesses.
The CTA also includes an option for the Secretary of the Treasury, with the written concurrence of the Attorney General and the Secretary of Homeland Security, to exclude by regulation additional types of entities.
Rest assured, Accumera will be tracking the launch and will keep you updated when the dates are finalized!
DEPARTMENT OF THE TREASURY, Financial Crimes Enforcement Network, 31 CFR Part 1010, “Beneficial Ownership Information Reporting Requirements”. Federal Register / Vol. 86, No. 233 / 69920-69974 / Wednesday, December 8, 2021 / Proposed Rules, https://www.govinfo.gov/content/pkg/FR-2021-12-08/pdf/2021-26548.pdf.