The Corporate Transparency Act, enacted as part of the Anti-Money Laundering Act of 2020, introduces significant reporting requirements for many businesses in the US.
Beginning January 1, 2025, most corporations, LLCs, and other similar entities created or registered to do business in the US must file a Beneficial Ownership Information Report with the Financial Crimes Enforcement Network (FinCEN).
Failure to report or providing false information can result in civil and criminal penalties, including fines up to $500 per day of noncompliance and possible imprisonment.
While aimed at increasing corporate transparency to combat financial crimes, the law also presents potential risks for scams and misinformation. Business owners, especially those managing limited liability companies (LLCs), must be prepared to meet these obligations and safeguard themselves against fraud.
Beware of scams and misinformation
With the introduction of new regulations, scammers may exploit confusion to target small business owners. Common tactics include:
- Fraudulent compliance services. Scammers might pose as official agencies offering to complete CTA filings for a fee.
- Phishing emails. Fraudsters could send emails impersonating FinCEN or other agencies, asking for sensitive information.
- Misinformation campaigns. Incorrect details about exemptions or deadlines may circulate, causing businesses to miss deadlines or fall prey to fraud.
How to stay informed and protected
- Use official sources. Business owners should rely on government websites, such as FinCEN’s official site, for accurate information.
- Verify communications. Always double-check the sender’s credentials before sharing sensitive details. FinCEN does not request reports or fees via email.
- Consult trusted advisors. Businesses should work with their accountant, attorney, or business advisor to ensure compliance.
- Report scams. Report suspicious activity to BBB’s Scam Tracker and the FTC.
Entities exempt include:
- Larger companies with more than 20 full-time employees and over $5 million in annual revenue.
- Certain regulated entities, like banks and insurance companies.
- Publicly traded companies.