new registration obligations are triggered for companies

With the entry into force of Corporate Transparency Act from January 1, 2024 the owners of American companies will be obliged to register at it US Department of Treasury. In this regard, the Federal Government created the “United States Business Registry”, the first federal register of US companies. “The data of the companies and their respective owners will not be disclosed: they will only be used in the case of any criminal proceedings – explains Lucio Miranda President of ExportUSA -. The standard applies to both LLCs and Corporations, this is a measure that will be adopted in all 50 American states.” This type of regulation, adopted for the first time in America, will go beyond the individual state jurisdiction in corporate matters. The purpose is to strengthen the fight against money laundering. The names of the owners will only be used if there are investigations relating to international organized crime. A novelty that he put the beneficial owners of assets are alarmed held through US companies, for tax purposes residents in Italy, who must ensure that they adapt to the new legislation. Those who hold assets in the USA but also those who hold assets anywhere in the world through American companies (eg LLC etc.) or trusts established there, will, in fact, have to carefully evaluate the correctness of their position based on the declaration obligations as beneficial owner .

What is the Corporate Transparency Act?

The CTA, a component of the anti-money laundering law of 2020, was enacted to prevent money laundering, terrorist financing and other illicit activities. By increasing the information reported on commercial entities, the CTA aims to prevent the exploitation of companies and US LLCs for illicit purposes and to assist law enforcement in detecting criminal activity. The CTA will enter effective January 1, 2024. At the beginning of the new year, all affected entities will have a limited period of time to register the requested information with the Financial Crimes Enforcement Network (“FinCEN”), a division of the United States Department of the Treasury, which is the American federal agency that administers this program. It should be noted that the names of the owners of the companies, as well as all other information subject to registration, will not be in the public domain. The aim of the legislation is in fact to strengthen the fight against money laundering. The names of the owners and all other information will only be used in the context of investigations into international organized crime.

The new obligations: who is obliged and who is exempt

Becomes obligatory declare i beneficial owners of companies incorporated in the United States. Directors, shareholders and ultimate beneficiaries of companies incorporated in America are required to comply with the regulations set out in the Corporate Transparency Act. The Corporate Transparency Act defines beneficial owner as a individual which, directly or indirectly, exercises “substantial control” on a reporting company or owns or controls at least 25% of the ownership interests in a reporting company.

Not all types of companies are obliged to disclose beneficiaries. There are 23 categories of exempt economic entities from registration such as: Banks, Insurance companies, Financial consultants, Non-profit companies, “Large operating companies” etc.

How to register

We need to create a online account in the appropriate portal managed by FinCEN, report the company data, and register the names of the beneficial owners of the company (the so-called “ultimate beneficiaries”). Access to the FinCen portal will only be possible starting from January 2024.

All companies incorporated before January 1, 2024 will have time a year to register the beneficial owners. While companies incorporated starting from 1 January 2024 will have to register within 30 days from the date of incorporation.

The sanctions

Failure to report information required by the Corporate Transparency Act can result in severe penalties. These penalties include civil penalties up to 500 dollars a day if the violation continues over time. They are also expected criminal penalties in the form of fines of up to $10,000, imprisonment of up to two years, or both. “In case of non-compliance – Miranda specifies – very heavy sanctions are foreseen which could even result in criminal charges”.