Enacted in 2021, the Corporate Transparency Act dealt a significant blow towards financial transparency. The act was interpreted and enforced by the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This relentless effort aims to force companies operating within the United States to disclose important information about the individuals, who own and control these entities.
Treasury Secretary, Janet Yellen says, “Corporate anonymity enables money laundering, drug trafficking, terrorism, and corruption. It harms American citizens and puts law-abiding small businesses at a disadvantage. Having a centralized database of beneficial ownership information will eliminate critical vulnerabilities in our financial system and allow us to tackle the scourge of illicit finance enabled by opaque corporate structures.” She also underlined the urgency of this initiative in her announcement.
The Corporate Transparency Act reduces the risks associated with corporate anonymity, which enables illegal activities that may endanger national security and the financial system’s integrity. By mandating companies to disclose ownership information, the act seeks to prevent money laundering, drug trafficking, terrorism, and corruption. It also helps to protect citizens and law-abiding small businesses from systematic scamming and Ponzi-scheme.
Beginning January 1, 2024, all existing companies, unless exempt, must submit the names, addresses, and photo IDs of individuals who own or control at least 25% of the company. The deadline is January 1, 2025, through BOI Reports at https://boiefiling.fincen.gov/. Companies formed after January 1, 2024, have 90 days from their registration date to file their BOI reports, but starting in 2025, new companies will have just 30 days to do so. All companies must update their reports whenever there are changes in address, ownership, or control.
A person who purposely violates the BOI reporting requirements may be subject to hefty civil penalties of up to $500 for each day that the violation continues. They may also be prosecuted with criminal penalties of up to 2 years’ incarceration and a fine of up to $10,000.

Possible violations include:

• willfully failing to file a beneficial ownership information report;
• willfully filing false beneficial ownership information; and
• willfully failing to correct or update previously reported beneficial ownership information.