We have made it to Part 3 of our three-part series on the Corporate Transparency Act’s final rule. The Financial Crimes Enforcement Network (FinCEN) released the final rule on Sept. 30, 2022. This article covers important timeframes to keep in mind as the rule rolls out over the next year.
In Part 1 of our refreshed series of articles, we highlighted FinCEN’s new guidance in its final rule related to the beneficial ownership information (BOI) reporting requirement. In Part 2, we covered the specifics related to what the CTA requires companies to report and how to determine when an exemption applies.
The CTA Goes Into Effect on Jan. 1, 2024
FinCEN has clarified that if a reporting company is created or registered before Jan. 1, 2024, then the company will have one year (until Jan. 1, 2025) to file an initial BOI report with FinCEN. Importantly, FinCEN specified in its final rule that these companies do not need to submit information on company applicants.
If a reporting company is created after Jan. 1, 2024, the company will have 30 days after receiving notice of its creation or registration to file its initial BOI report, which must include information on the company itself, its beneficial owner(s) and its company applicant(s).
Furthermore, if any information previously disclosed to FinCEN changes, reporting companies will have 30 days to report the change to FinCEN, and if inaccurate information is reported to FinCEN, reporting companies will also have 30 days after becoming aware of the inaccuracy to correct the report.
Will We See Additional Rulemaking?
Although FinCEN has consistently emphasized its commitment to safeguard reporting companies’ information, rapid concerns regarding who can access these BOI reports and for what purposes still exist. Therefore, FinCEN published additional rulemaking on Dec. 16, 2022, tackling this issue. We will explore this new rulemaking in a subsequent article. FinCEN is also in the process of developing a database for reports, the Beneficial Ownership Secure System, which means we are likely to continue to see even more rulemakings from FinCEN related to the CTA.
As timeframes for reporting are finalized and more rulemakings are released by FinCEN, it is becoming increasingly important for your business to review and understand its reporting obligations, if any, and what timeframes are associated with the obligations, especially because the reporting company is ultimately responsible for filing true, correct, and complete reports.
As FinCEN continues to release more guidance on its final rule, please contact KJK Corporate & Securities attorneys Alex Jones (AEJ@kjk.com; 216.736.7241) or Samantha Cira (SMC@kjk.com; 216.736.7232) for assistance navigating how and when to prepare reports in accordance with the CTA.