Are you a Latin America based business with a presence, or looking to establish a presence, in the U.S.?

If so, it is important that you are aware of the US Corporate Transparency Act, which became effective on January 1, 2024.

The U.S. Corporate Transparency Act (“CTA”) applies to corporations, limited liability companies and other businesses that are formed by making the required filing with a secretary of state in the U.S., and also applies to foreign corporate entities that are required to make a filing with a secretary of state in the U.S. in order to do business in the U.S. The above entities are required under the CTA to report information about their owners, management and individuals who helped create the entities to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). The information reported to FinCEN is intended to assist law enforcement in combating money laundering, tax fraud, terrorist financing, and other unlawful activities attributed to a business organization. 

The CTA provides for several exemptions, such as reporting securities issuers and public companies, banks, depository institution holding companies, certain money transmitting businesses, certain broker-dealer, certain financial advisers, certain venture capital advisers, certain registered investment companies and investment advisers, commodities exchange act registered entities, and tax-exempt entities. 

What are the deadlines for CTA compliance?

Reporting companies formed or registered to do business in the U.S.:

• Before January 1, 2024, must file their initial beneficial ownership information (“BOI”) report with FinCEN by January 1, 2025.
• Between January 1, 2024 – December 31, 2024, must file their BOI report within 90 days of the earlier of the date on which it receives actual or public notice that the reporting company has been created or registered to do business.
• After January 1, 2025, must file their BOI report within 30 days of the earlier of the date on which it receives actual or public notice that the reporting company has been created or registered to do business.

What will the initial report require?

An initial BOI report should include certain identifying information about the reporting company, its applicants, and its beneficial owners. Each applicant and beneficial owner is required to complete a fact-based analysis. An “applicant” is any individual who directs or controls the filing of an application to incorporate or form a domestic entity, or register a foreign entity, with a Secretary of State or similar office. While a “beneficial owner” is an individual who, directly or indirectly: (i) exercises substantial control over the company; or (ii) controls 25% or more of the ownership interests of the company. The CTA does not require corporate entities to disclose sensitive operational or financial information. For additional information on the different types of corporate entities that are available in the U.S. please check this article.

Who has access to the information on the report?

Reported beneficial ownership information is not accessible to the public. In addition, an individual or entity may request a FinCEN identifier number to use in place of providing personal information when reporting beneficial ownership information to add an extra layer of privacy. FinCEN is authorized to disclose information to certain authorized government enforcement agencies, federal regulators, treasury, and financial institutions. For information on how to benefit from having a compliance manual in place, please see this article.

What are the consequences for non-compliance?

The CTA contemplates penalties for individuals (officers, applicants, and beneficial owners), and corporate entities, for willfully (including willful blindness) violating beneficial ownership information reporting requirements. There are civil penalties of up to $500 for each day that the violation continues, as well as criminal penalties of up to two years in prison and a fine of up to $10,000.

If your business has a presence in the U.S., or you are looking to establish a presence in the U.S., regardless of the industry where you operate, our experienced team of lawyers can perform the relevant beneficial ownership analysis and ensure that your business complies with the requirements of the CTA.

Please get in touch if you would like to learn more about how to establish a presence in the U.S. for your business, or solidify your existing presence in the U.S.