Jim Bedsole, now retired Chief Compliance & Risk Officer for BankSouth, recently shared insights with Athens CEO about the new Beneficial Ownership Requirements established under the Corporate Transparency Act of 2021. This significant piece of legislation aims to combat money laundering and terrorist financing. FinCEN, part of the US Treasury Department, issued detailed regulations in 2023 outlining these requirements for various business entities, along with exemptions and filing deadlines. You can view the full video on the Athens CEO website.
The primary objective of the Corporate Transparency Act is to enhance financial transparency by mandating that businesses report their beneficial owners. A beneficial owner is any individual who directly or indirectly owns or controls 25% or more of a company, or who exercises substantial control over the company. This measure helps prevent the misuse of shell companies for illicit activities. By identifying and reporting these individuals, financial institutions can better track and prevent money laundering and terrorist financing.
Businesses must comply with the new reporting requirements by filing beneficial ownership information with FinCEN. The regulations include specific exemptions for certain types of entities, such as publicly traded companies, non-profits, banks, credit unions, and certain other regulated institutions. Understanding these exemptions is crucial for businesses to determine whether they need to report. Additionally, FinCEN has established clear guidelines and deadlines for compliance, ensuring that businesses have ample time to meet their obligations.
The regulations stipulate precise filing deadlines that businesses must adhere to, with significant penalties for non-compliance. Entities formed before 1/1/2024 have until 1/1/2025 to file. Entities formed on or after 1/1/2024 have 90 days from formation to file. And entities formed on or after 1/1/2025 will have 30 days from formation to file. Non-compliance can result in substantial fines and criminal penalties, underscoring the importance of timely and accurate reporting.
Understanding and complying with the Beneficial Ownership Requirements under the Corporate Transparency Act of 2021 is essential for all business entities. Visit BankSouth.com/business/beneficial-ownership to learn more about the Beneficial Ownership rule and access valuable resources, including a direct link to the FinCEN website. For specific legal advice, please contact your legal counsel.
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