Corporate Transparency Act Part 2 Beneficial Owner – Exercising Substantial Control

The Corporate Transparency Act (the “CTA”) was enacted by Congress on January 1, 2021 as part of the federal government’s initiative to crack down on illicit activities. Effective January 1, 2024, most new and existing entities registered to do business in the United States will be mandated to file a report with the Financial Crimes Enforcement Network (“FinCEN”) disclosing information about the entity’s beneficial owners. The CTA defines a beneficial owner as any individual who, directly or indirectly, either exercises “substantial control” over the company or owns or controls at least 25% or more of the company’s ownership interests. An individual may directly or indirectly own or control the ownership interest of the company through various means, including joint ownership with one or more persons, through another individual acting as an intermediary, custodian, or agent, as a trustee, beneficiary, or grantor of a trust or similar arrangement, or by means of ownership or control of one or more intermediary entities that separately or collectively own or control the ownership interest of the company subject to reporting. “Substantial control” is exercised over the company if the individual 1) serves as a senior officer of the company; 2) has authority over the appointment or removal of any senior officer or a majority of the board…