Pub. 12 2021 Issue 4

Pub. 12 2021 I Issue 4 Winter 15 West Virginia Banker between two or more states and that exercises governmental authority on behalf of the United States or any such state or political subdivision 3. A bank 4. A federal or state credit union 5. A bank or savings and loan holding company 6. A broker or dealer registered under Section 15 of the Exchange Act 7. An investment adviser that has made certain filings with the SEC 8. An insurance company as defined in the Investment Company Act of 1940 9. A public accounting firm registered under the Sarbanes-Oxley Act of 2002 10. A public utility 11. A tax exempt Section 501(c) corporation, political organization, charitable trust or split-interest trust exempt from tax 12. An entity that: (i) E mploys more than 20 employees on a full-time basis in the United States (ii) Filed in the previous year federal income tax returns in the United States demonstrating more than $5,000,000 in gross receipts or sales (iii) H as an operating presence at a physical office within the United States Who is a beneficial owner? A “beneficial owner” under the CTA is defined as an individual who, directly or indirectly, exercises substantial control over the entity or owns or controls not less than 25% of the ownership interests of the entity. A beneficial owner does not include: (i) a minor child if the information of the child’s parent or guardian is reported (ii) an individual acting as a nominee, intermediary, custodian or agent on behalf of another individual (iii) an individual acting solely as an employee of the entity and whose control over or economic benefits from such entity is derived solely from the employment status of the person (iv) an individual whose only interest is through a right of inheritance (v) a creditor of the entity, unless the creditor exercises substantial control over the entity or owns or controls not less than 25% of the ownership interests of the entity What is required to be reported and when? Reporting companies must deliver a report to FinCEN containing the full legal name, date of birth, current residential or business street address, and unique identifying number from an acceptable identification document or FinCEN identifier. If an entity is formed before the effective date of the regulations, that entity has two years to deliver its beneficial ownership report. Entities formed after the effective date of the regulations must comply with CTA upon the formation of the entity. If there are changes to the information to be included in the report, the entity has one year after the date of the change to submit an updated report. Noncompliance with the CTA or providing inaccurate or misleading information to FinCEN can result in $500 per day penalties, not to exceed $10,000. It could result in up to two years in prison for any person committing a reporting violation. How will beneficial ownership information be maintained? Beneficial ownership information provided to FinCEN will be kept in a confidential national registry that will be maintained for at least five years after termination of the reporting company. The Secretary of the Treasury must maintain information security protections for all beneficial ownership information. Takeaways • CTA shifts certain reporting obligations away from financial institutions • CTA largely applies to foreign-owned shell companies, but all companies should determine if they are a reporting company under CTA • Greater access to beneficial ownership information will be granted to federal and state agencies and state and local law enforcement agencies, and such agencies will be able to share such information with international agencies to combat money laundering, financing of terrorism, and other illicit activity; and • Companies should pay close attention to implementing regulations once promulgated.  Matthew Kingery is Of Counsel with Lewis Glasser, PLLC, in Charleston, West Virginia. Matt devotes his practice to commercial transactions, lender representation, commercial development, distressed assets and real property matters with an emphasis on title, acquisitions, sales and financing issues. Matt has been recognized for his work in the legal industry and community and has received numerous awards including being selected multiple times in Super Lawyers® in the practice area of real property law; named the 2010 West Virginia State Bar Young Lawyer of the Year; honored as a recipient of the 2009 Generation Next 40 Under 40 award by The State Journal; and named a Young Gun by the West Virginia Executive in 2017. He can be reached at mkingery@lewisglasser.com .