A U.S. District Judge issued a nationwide preliminary injunction prohibiting the enforcement of the Corporate Transparency Act (CTA) that required certain businesses to report the beneficial ownership information of their business with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury by the January 1, 2025 reporting deadline for all reporting companies. The Court found that Congress exceeded its authority in enacting the CTA, resulting in an unconstitutional infringement on states’ rights to regulate businesses.
The CTA is a federal anti-money laundering statute that requires most business to report their beneficial ownership information to FinCEN by the filing of a Business Beneficial Ownership (“BOI”) Report.
A BOI Report requires the listing of a reporting company’s (1) full legal name, (2) any trade or DBA names, (3) complete current street address of the principal place of business, (4) jurisdiction of formation, and (5) taxpayer identification number.
In addition, the BOI Report requires each beneficial owner (defined as an individual who, directly or indirectly, exercises substantial control over the reporting company or owns or controls at least 25 percent of its ownership interests) list their (1) full legal name, (2) date of birth, (3) complete current residential street address, (4) unique identifying number and the issuing jurisdiction from either a current (i) U.S. passport, (ii) state or local ID document, (iii) driver’s license, or (iv) if the individual has none of those, a foreign passport, and (5) an image of the document from which the unique identifying number was obtained.
There are exemptions for the requirement to file a BOI Report, most of which exclude businesses
that are already subject to substantial federal or state regulation including publicly traded companies and those that file reports with the SEC, credit unions, tax-exempt entities, banks, money services businesses, securities brokers and dealers, insurance companies, state-licensed insurance producers, pooled investment vehicles, public utilities, and accounting firms. In addition, an exemption exists for “large operating companies” defined as is an entity that (1) employs more than 20 full-time employees in the United States, (2) has an operating presence at a physical office within the United States, and (3) has filed a federal income tax or information return in the United States for the previous year demonstrating more than $5 million in gross receipts or sales.
Lanak & Hanna is monitoring the status of the injunction and company requirements to file a BOI Report. Please contact Jim Millane at (714) 451-7754 if you have any questions.
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