Over a veto of President Trump, on January 1, 2021, the Corporate Transparency Act (“CTA”) went into effect as part of the National Defense Authorization Act (“NDAA”). The CTA, many years in the making, introduces major changes to transparency requirements of entities registered in the United States. No longer can anonymous shell companies, limited liability companies, and the like hide the identities of their owners. In aiming to end this phenomenon, which resulted in the United States becoming a leading “safe haven” jurisdiction for those seeking anonymity of ownership, the CTA establishes a central database of beneficial owners of corporations, LLCs, and other corporate entities, available to law enforcement agencies (but not the public), and an affirmative obligation on the entity to identify and report its ownership. The CTA requires, with very limited exceptions, all U.S. registered corporations, LLCs, or similar entities to report beneficial ownership information to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”). The new registry will collect the names, dates of birth, addresses, and identification documents of individuals who own at least a 25 percent equity stake in the entity, or exercise substantial control over the entity, which will more directly tie the responsibility of the entity’s conduct to specific individuals.

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