Money laundering has posed a substantial threat to the U.S. economy for decades and financial institutions have served as a front line of defense under anti-money laundering regulations such as the Customer Due Diligence Requirements for Financial Institutions rule (the “CDD”) issued by U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”). Banks are all too familiar with chasing down information on owners with 25% or more of the equity interests in legal entity customers and natural persons with “significant responsibility to control, manager, or direct” a legal entity customer. However, beginning Jan. 1, 2024, the previously enacted Corporate Transparency Act (the “CTA”) requires certain business entities, each defined as a “reporting company,” to self-report similar information to FinCEN, creating an opportunity to ease the information gathering requirements of banks. Who Must Report? A “reporting company” includes any corporation, limited liability company, or other similar entity that is (i) created by filing a document with a secretary of state or similar office under the law of a State or Indian Tribe, or (ii) formed under the law of a foreign country and registered to do business in the U.S. by filing a document with a secretary of state or similar office under the law of a State or Indian Tribe [31 U.S.C.A. § 5336(a)(11)]. The CTA also provides a list of 23 categories of entities that are exempt from reporting requirements under the CTA. These exemptions exist because the entities are already highly regulated or subject to similar ownership reporting requirements. Banks, federal and state credit unions, bank holding companies, savings and loan holding companies, entities registered with the CORPORATE TRANSPARENCY ACT: New Beneficial Ownership Reporting Creates Efficiencies for Banks By Drew A. Proudfoot and Amy J. Tawney, Bowles Rice
RkJQdWJsaXNoZXIy MTg3NDExNQ==