Federal Corporate Transparency Act Reporting Requirements Take Effect January 1, 2024

Federal Corporate Transparency Act Reporting Requirements Take Effect January 1, 2024

Congress on January 1, 2021 passed the Corporate Transparency Act (CTA) as part of the 2021 National Defense Authorization Act. The CTA takes effect January 1, 2024 and significantly expands U.S. anti-money-laundering laws. Though intended to combat corruption, tax fraud, and other illicit financial activity, its sweeping requirements apply to many privately-owned businesses with U.S. operations. Specifically, the CTA will require a “Reporting Company” to provide information on its beneficial owners to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury. A “Reporting Company” can be either domestic or foreign, but there are twenty-three enumerated exemptions, many of which exempt entire industries. An individual or Reporting Company who violates the CTA is subject to a civil penalty of up to $500 for each day the violation continues, up to a maximum penalty of $10,000. Beneficial owners and senior officers of the Reporting Company may also be held liable in certain circumstances, so it behooves all production companies and studios to review the CTA to determine whether it applies. Experienced outside counsel should assist in making this determination and in preparing any required reports.