Frequently Asked Questions About CTA

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The CTA is an ownership and control reporting requirement for the U.S. Department of Treasury's FinCen Division (Financial Crimes and Enforcement Division). The Act mandates the disclosure of corporate entities' ownership and control information.

In other words, who is/are the owners of the LLCs, C-Corps, and Limited Partnerships and who within those corporate entities, exerts substantial control over the operations of the corporate entities.

Prior to the enactment of the CTA in 2021, according to the IMF, (International Monetary Fund), the US was the second most secretive financial jurisdiction in the world. In other words, there were no legal requirements on the state and federal level to disclose the owners of corporate entities that were formed in the U.S. This allowed for the creation of sham companies by bad actors and criminals who used the US financial system to engage in criminal conduct (including funding of domestic and international terrorism and arms trafficking) with impunity and without fear of criminal prosecution.  Congress sought to address this national security threat by enacting in 2020 the Anti-Money Laundering Act. However, as federal investigators attempted to investigate suspicious sham companies, they realized that every time they investigated a sham company, that company was owned by another layer or layers of sham companies. As one of the federal investigators stated to Congress, this was the Matryoshka Doll. In 2021, Congress passed the Natural Authorization Defense Act which amended the AMLA of 2020 to ADD the CTA to the AMLA and hence it became law, and the mandatory reporting requirement went into effect on January 1, 2024. 

The CTA applies to "reporting companies" as that term is defined in the Act itself.  A reporting company is any entity that is formed by filing Formation Documents at the state level with the office of the Secretary of State OR a foreign company that has registered with the Secretary of State of a state to do business in the U.S. Again, entities such as LLCs, C-Corps, and Limited Partnerships. 

There are 23 entities that are exempt from mandatory disclosure. The most noteworthy are C-Corps with more than 20 employees and annual revenue of +$5M, Non-profits, Trusts and Dormant entities.  

Penalties for noncompliance can include:

• Forfeiture of business license
• Substantial Fines
• Criminal Charges
• Potential Imprisonment

We can assist you in ensuring full compliance with the Corporate Transparency Act (CTA) by accurately filing beneficial ownership information reports (BOI) and providing expert guidance on regulatory requirements to safeguard your business from penalties and enhance transparency.