Corporate Transparency Act: what you need to know if you are a small foreign company in the U.S.

As of January 1, 2024 the U.S. Government Corporate Transparency Act of September 2022 has come into effect. This Act is meant to curb illicit finance activities and combat money laundering. The goal is to bring more transparency in small company corporate structures and prevent the creation of shell companies.

It is important for existing European companies in the U.S., or those who are planning to open a subsidiary, to become familiar with this legislation an comply to avoid hefty fines. CTA violations may cost $500 per day up to $10,000 per violation and even potential criminal penalties. ?

The rule requires small businesses to file a BOI report, Beneficial Ownership Information Report, with the FinCEN, the Financial Crimes Enforcement Network which is part of the United States Department of Treasury. Small businesses must share details about their owners, or any individual who holds financial stakes in the company or has significant power over the business decisions. The report must include the below pieces of information:

• name;
• date of birth;
• address; and
• the identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.

Timing is important:

• Existing companies:?Reporting companies created or registered to do business in the United States before January 1, 2024 must file by January 1, 2025.
• Newly created or registered companies:?Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.

There are, however, 23 exceptions to the filing. Filing is quite easy and quick.

For more information on this topic:

https://www.fincen.gov/beneficial-ownership-information-reporting-rule-fact-sheet

https://home.treasury.gov/

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Ivana Lodovici is an international headhunter, interviewing coach, resume writer, and cross-cultural recruiting consultant. Contact her at?[email protected] ?to engage her in a search or book a speaking engagement.