Risks of Non-Compliance

September 19, 2023  |  Carole Clark Isakson

At Barna, Guzy & Steffen, our corporate practice group monitors developments related to the Corporate Transparency Act (CTA). We have addressed various aspects of the CTA in previous blog posts. We recommend reviewing those if you haven’t already done so. Today, we aim to highlight potential implications and risks of non-compliance.

Regulations and Disclosures

The Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Treasury Department, has recently proposed final rules related to the enforcement of the CTA. The bureau’s primary objective is eliminating corporate anonymity and hindering money laundering activities.

While the final regulations interpreting and giving detailed compliance instructions on the CTA are not yet available as of the date of this post, a person will be required to make disclosures to FinCEN starting on January 1, 2024, if the person:

  • participated in forming a corporate entity; or
  • owns more than 25% of an entity; or
  • has significant control over an entity, such as making hiring and firing decisions at the C-suite level.

You will also need to report to FinCEN when there are changes to the information in the initial report, such as when you relocate or when the ownership or control of the underlying entity changes.

Significant Consequences of Non-Compliance

Any individual who intentionally supplies false information or knowingly fails to report complete or updated information could face a daily civil penalty of up to $500 until the violation is rectified. Additionally, the offender could be fined up to $10,000 and face imprisonment of up to two years.

We Can Help

Though many aspects of the reporting process and requirements remain uncertain at the time of writing this blog post, our corporate practice at Barna, Guzy, & Steffen is dedicated to staying informed about any changes to the CTA requirements. If you are a business owner or executive with concerns about CTA reporting requirements, our experienced corporate attorneys Carole Clark Isakson, and Scott Hagel are ready to assist you. Contact us today.