CTA Key Terms

CTA:

Corporate Transparency Act

• Designed to fill gaps in the fight against money laundering, illicit shell corporations, and bad actors.

BOI:

Beneficial Ownership Information

• A Beneficial Owner is an individual who owns or controls at least 25 percent of a company or exercises substantial control over the company.
• Actual report not yet published; however personal information needed will include:
  • - Full legal name
  • - Date of birth
  • - Current residential or business street address
  • - A unique identifying number from an acceptable identification document such as a passport or driver's license

Company Applicant:

• 1: Direct Filer
  • This is the individual who directly filed the document that created a domestic reporting company, or the individual who directly filed the document that first registered a foreign reporting company. This individual would have actually physically or electronically filed the document with the secretary of state or similar office.
• 2: Directs or controls the filing action
  • The other possible company applicant is the individual who was primarily responsible for directing or controlling the filing of the creation or first registration document. This individual is a company applicant even though the individual did not actually file the document with the secretary of state or similar office.

FinCEN:

U.S. Department of the Treasury's Financial Crimes Enforcement Network Anti-Money Laundering Act of 2020 in the National Defense Authorization Act for

Fiscal Year 2021

• ⚬ Where the CTA was included and eventually passed

BSA:

Bank Secrecy Act in place since 1970

• Combat money laundering by requiring financial institutions to establish and maintain anti-money laundering (AML) programs.
• Suspicious activity reporting (SAR) and currency transaction reporting (CTR)

CDD:

Customer Due Diligence

• Under the BSA, financial institutions are required to establish and maintain effective CDD programs.
• Identifying and verifying the identity of customers, assessing the risks associated with those customers, and monitoring their transactions for suspicious activity.

FATF:

Financial Action Task Force

• Intergovernmental organization tasked with evaluating and reporting on member countries' ability to combat and prevent financial crimes.

Reporting Company:

• The CTA defines a reporting company as a corporation, LLC, or other similar entity that is (i) created by the filing of a document with a secretary of state or a similar office under the law of a state or Indian tribe, or (ii) formed under the law of a foreign country and registered to do business in the United States by the filing of a document with a secretary of state or a similar office under the laws of a state or Indian tribe.
• You can download the list of exemptions here.

Disclaimer: The content and materials which have been prepared by CLAS Information Services regarding the Corporate Transparency Act are for informational purposes only, and are not intended to provide, and should not be relied upon for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any future corporate formation transactions. Content regarding the Corporate Transparency Act has been taken directly from FinCEN. Additional information regarding the Corporate Transparency Act is available through the FinCEN website by clicking here or you can contact FinCEN directly with additional questions here.