The CTA requires a “reporting company” – broadly defined but with many types of companies exempted – to submit beneficial ownership information along with information on each “applicant” for the reporting company to FinCEN.

An entity qualifies as a reporting company” if it is:

• A “domestic reporting company” defined as a corporation, limited liability company, or other similar entity created by the filing of a document with a secretary of state or any similar office under the law of a State (including commonwealths, territories, or other U.S. possessions) or tribal territory; or
• A “foreign reporting company” defined as a corporation, limited liability company, or other similar entity formed under the laws of a foreign country and registered to do business under the laws of a U.S. State or tribal territory.

FinCEN did not clarify what “other similar entity” means, but expressed its view that sole proprietorships, certain types of trusts, and general partnerships in many, if not most, circumstances are not created through the filing of a document with a secretary of state or similar office and, in such cases, would not be a reporting company.

Reporting Exemptions
The scope of the CTA’s reporting requirements is significantly narrowed by the exclusion of 23 categories of entities from the definition of "reporting company." Many of the exemptions in the CTA itself are based on excluding entities that are already subject to significant public oversight and reporting requirements. Congress authorized the Treasury Department to exempt additional categories of entities but the agency has declined to do so (though it could choose to at some point in the future). An entity that falls into one of the exemption categories will not be required to submit beneficial ownership information to FinCEN. A summary of the exemptions is available under the “Exemptions” tab in the Resource Center.

A simplified list of the exclusions follows. Companies that believe they are exempt should carefully review with counsel subparagraph (B) to the definition of "reporting company” for a complete list of requirements associated with each exclusion to confirm the exemption applies.
 

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1. Public Companies: Including: (a) an issuer of a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 781), or (b) an issuer required to file supplementary and periodic information under section 15(d) of the Securities Exchange Act of 1934.
2. Larger Companies: Any entity that: (1) employs more than 20 full-time employees in the U.S., (2) has a physical office in the U.S., and (3) reported more than $5 million in gross receipts or sales on the previous year’s Federal income tax return.
3. Certain registered investment companies and investment advisers: Any entity that is registered with the SEC under the Investment Company Act of 1940 or the Investment Advisers Act of 1940 and is: (a) an investment company as defined in Section 3 of the Investment Company Act of 1940, or is an investment adviser as defined in Section 202 of the Investment Advisers Act of 1940.
4. Banks: Any bank, as defined in: (a) Section 3 of the Federal Deposit Insurance Act, (b) Section 2(a) of the Investment Company Act of 1940, or (c) Section 202(a) of the Investment Advisers Act of 1940.
5. Credit Unions: Any Federal credit union or State credit union, as defined in Section 101 of the Federal Credit Union Act.
6. Tax-exempt entities: Including: 501(c) nonprofits; 527 political organizations; trusts under paragraphs (1) and (2) of section 4947(a) of the Internal Revenue Code.
7. Depository institution holding company: Any bank holding company under Section 2 of the Bank Holding Company Act of 1956, or any savings and loan holding company under Section 10(a) of the Home Owners’ Loan Act.
8. Money services and money transmitting businesses: So long as they are registered with FinCEN.
9. Securities brokers or dealers: As defined in Section 3 of the Securities Exchange Act of 1934 and that is registered under Section 15 of that Act.
10. Securities exchange or clearing agencies: Any exchange or clearing agency, under Section 3 of the Securities Exchange Act of 1934, which is registered with the SEC pursuant to that Act.
11. Any other entity registered with the SEC under the Securities and Exchange Act of 1934
12. Venture capital fund advisers: Any investment adviser that: (a) is described in section 203(l) of the Investment Advisers Act of 1940, and (b) has filed Item 10, Schedule A, and Schedule B of Part 1A of Form ADV, or any successor thereto, with the SEC.
13. Insurance companies: As defined in Section 2 of the Investment Company Act of 1940.
14. State-licensed insurance producers: Any entity that: (a) is an insurance producer that is authorized by a State and subject to supervision by the insurance commissioner or a similar official or agency of a State, and (b) has an operating presence at a physical office within the United States.
15. Certain entities registered under, or covered by, the Commodity Exchange Act: Any entity that: (a) is a registered entity as defined in Section 1a of the Commodity Exchange Act, or (b) is: (1) a futures commission merchant, introducing broker, swap dealer, major swap participant, commodity pool operator, or commodity trading advisor, each as defined in Section 1a of the Commodity Exchange Act, or a retail foreign exchange dealer as described in Section 2(c)(2)(B) of the Commodity Exchange Act and (2) registered with the Commodity Futures Trading Commission under the Commodity Exchange Act.
16. Public accounting firms: Registered in accordance with Section 102 of the Sarbanes-Oxley Act of 2002.
17. Public utilities: Any entity that is a regulated public utility as defined in 26 USC 7701(a)(33)(A) that provides telecommunications services, electrical power, natural gas, or water and sewer services within the United States.
18. Financial market utilities: Designated by the Financial Stability Oversight Council under Section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010.
19. Pooled investment vehicles: That is operated or advised by one of the following entities that is also exempt from CTA reporting requirements: a bank, credit union, broker or dealer in securities, investment company or investment adviser, or venture capital fund adviser.
20. Entities that only assist tax-exempt entities: Any entity that: (a) operates exclusively to provide financial assistance to, or hold governance rights over a tax-exempt entity, (b) is a United States person, (c) is beneficially owned or controlled exclusively by one or more United States persons that are United States citizens or lawfully admitted for permanent residence, and (d) derives at least a majority of its funding or revenue from one or more United States persons that are United States citizens or lawfully admitted for permanent residence.
21. Government entities: Any entity that: (a) is established under the laws of the United States, an Indian tribe, a State, or a political subdivision of a State, or under an interstate compact between two or more States, and (b) exercises governmental authority.
22. Inactive entities: Any entity in existence on or before January 1, 2020, that is not engaged in active business, not owned by a foreign person, has not (in the last 12 months) experienced any change in owners, has not sent or received funds totaling $1,000, and does not otherwise hold any assets
23. Subsidiaries of certain exempt entities: Any subsidiary or other entity owned or controlled (directly or indirectly) by an entity exempt from reporting requirements (except those owned or controlled by money transmitting businesses; certain pooled investment vehicles; certain entities that operate exclusively to provide financial assistance/hold governance rights over a nonprofit, political organizations, or certain trusts; and certain inactive businesses)

As a result of these exemptions, the CTA’s reporting requirements will largely impact smaller companies in addition to the shell or holding companies that often are targeted by anti-money laundering laws.


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The CTA and FinCEN’s regulations implementing the CTA require non-exempt reporting companies (domestic and foreign) to provide information on: (A) the reporting company itself; (B) the “applicants” who formed/registered the reporting company with a state or Indian tribe; and (C). the reporting company’s “beneficial owners.”
 

A. Reporting Company

Each reporting company must provide the following information about itself: 1. The full legal name of the reporting company; 2. Any and all trade names or ‘‘doing business as’’ names regardless of whether they are registered; 3. The business street address of the reporting company; for a reporting company with a principal place of business in the United States, the reporting company should provide the street address of that principal place of business; for a reporting company with a principal place of business outside of the United States, the reporting company should provide the street address of the primary location in the United States where the reporting company conducts business. A P.O. box or the address of a company formation agent or other third party cannot be used. 4. The State or Tribal jurisdiction of formation of the reporting company, or for a foreign reporting company, the state or Tribal jurisdiction where such company first registers; and 5. The IRS Taxpayer Identification Number (TIN) (including an Employer Identification Number (EIN)) of the reporting company, or, for foreign reporting companies without a TIN, a foreign tax identification number (along with the name of the relevant jurisdiction).

 

B. The Applicant

An “applicant” is defined as any individual who files the document that: 1. “creates” a domestic reporting company; or 2. “first registers” a foreign reporting company to do business in any state. An applicant is defined broadly to include both the person who actually files the paperwork and the individual who directs or controls the filing. This will include law firm employees such as paralegals as well as employees of a business formation service. According to FinCEN, the definition is designed to identify the individual who is responsible for the creation of a reporting company through the filing of formation documents, and the individual who directly submits the formation documents, if that function is performed by a different person, but it reduces the potential burden of identifying applicants by limiting the definition of company applicant to only one or two individuals. Once you are the “applicant” for a reporting company you are always that company’s applicant “for all time after the entity is created.” In other words, there is no need to update the applicant information once submitted unless the information originally reported was inaccurate in which case reporting companies are required to correct the erroneous information. For each applicant, the reporting company must provide the following information to FinCEN: 1. Full legal name; 2. Current address; A company applicant “who forms or registers an entity in the course of such company applicant’s business” must report their business address For all other applicants, a current residential street address (in the U.S. or foreign jurisdiction, if the applicant does not have a U.S. address) must be provided; Alternatives such as post office boxes, private mailboxes, and addresses of business agents or corporate agents are not considered residential street addresses 3. Date of birth; 4. Unique identification number and name of issuing jurisdiction from one of four types of acceptable identify documents (i.e., an unexpired U.S. passport; unexpired State-issued driver’s license; an unexpired state, local, or Tribal identification document; or, if an individual lacks one of those other documents, an unexpired foreign passport) or a FinCEN identifier; and 5. Image of the identification document from which the unique identifying number was obtained (if not using a FinCEN identifier). However, reporting companies created prior to the effective date (i.e., January 1, 2024) do not need to provide applicant information. Instead, these companies will only need to report that they were created/registered prior to the effective date of FinCEN’s regulations.

 

C. What Must be Reported About a Beneficial Owner(s)

For each beneficial owner, the reporting company must provide the following information to FinCEN: 1. Full legal name; 2. Current residential address; Alternatives such as post office boxes, private mailboxes, and addresses of business agents or corporate agents are not considered residential street addresses 3. Date of birth; 4. Unique identification number and name of issuing jurisdiction from one of four types of acceptable identify documents (i.e., an unexpired U.S. passport; unexpired State-issued driver’s license; an unexpired state, local, or Tribal identification document; or, if an individual lacks one of those other documents, an unexpired foreign passport) or a FinCEN identifier; and 5. Image of the identification document from which the unique identifying number was obtained (if not using a FinCEN identifier).

 
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The CTA outlines general timelines for making beneficial ownership reports as follows:


 

Domestic Reporting Companies Created Before January 1, 2024 OR Any entity that becomes a Foreign Reporting Company Before January 1, 2024	Not later than 1 year after the effective date (i.e. by January 1, 2025)
Domestic or Foreign Reporting Companies Created/Registered On or After January 1, 2024, and Before January 1, 2025	Within 90 calendar days of the earlier of the date on which the reporting company receives actual notice that its creation/registration has become effective OR the date a secretary of state (or similar office) first provides public notice, such as through a publicly-accessible registry, that the domestic company has been created or the foreign reporting company has been registered
Domestic or Foreign Reporting Companies Created/ Registered On or After January 1, 2025	Within 30 calendar days of the earlier of the date on which the reporting company receives actual notice that its creation/registration has become effective OR the date a secretary of state (or similar office) first provides public notice, such as through a publicly accessible registry, that the domestic company has been created or the foreign reporting company has been registered
Updating Prior Reports	Within 30 calendar days of the date of change of any information previously provided to FinCEN If the update relates to the death of a beneficial owner, the time to file an updated report begins when the estate is settled not the date of the death. If the update relates to a minor child attaining the age of majority, the time to file an updated report begins on the date when the age of majority is reached (typically a person’s 18th birthday)
Correcting Prior Reports	Within 30 calendar days of the date the reporting company becomes aware, or has reason to know, that any required information contained in any report was inaccurate when filed and remains inaccurate. However, to qualify for the safe harbor provision at 31 U.S.C. 5336(h) (3)(C)(i)(I)(bb), the corrected report must be filed within 90 calendar days after the date on which an inaccurate report is filed.
Entities that Lose Exempt Status	Within 30 calendar days of ceasing to be exempt.
Newly Exempt Entities	An updated report must be filed indicating that the filing entity is no longer a reporting company within 30 calendar days of becoming exempt.

FinCEN indicated that it may consider providing additional guidance or relief to companies seeking an extension of the filing periods, but the final rule does not establish a mechanism for seeking an extension.

FinCEN has stated that it does not expect a reporting company to file an updated report upon company termination or dissolution.

The CTA also requires that the Federal Acquisition Regulation be amended to require “any contractor or subcontractor” that qualifies as a “reporting company” disclose beneficial ownership information “as part of any bid or proposal for a contract with a value threshold in excess of the simplified acquisition threshold,” which is currently set at $250,000 with certain exceptions.

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