The New Law That Nobody Is Talking About

• Jurisdiction: United States,Federal
• Pages: 16
• Citation: Vol. 46 No. 6 Pg. 16
• Publication year: 2023

The New Law That Nobody Is Talking About Vol. 46 No. 6 Pg. 16 Wyoming Bar Journal December 2023

By Ted Z. Sutton

The new law is called the Corporate Transparency Act (CTA), and it was passed on January 1, 2021. What exactly is the CTA? And how does it affect lawyers? We'll discuss these things below. Let's first discuss the CTA's history.

History of the CTA

The CTA was passed on January 1, 2021, as part of the National Defense and Authorization Act of 2021. When passing this bill, Congress had a few aims. These included stopping illegal activity, helping law enforcement, protecting national security, and matching other countries' corporate compliance standards.

To justify its passage, Congress cited evidence of foreign nationals who formed shell companies in the United States to engage in illegal activities. And because there is no such national database where law enforcement can easily find information about the companies and their owners, they have a difficult time tracking down these bad actors.

The enactment of the CTA changes this completely. The CTA requires a national database to be maintained with the Financial Crimes and Enforcement Network (FinCEN), a branch of the U.S. Department of the Treasury. This database is called the Beneficial Ownership Secure System (BOSS), and it is only available for access by federal agencies, state agencies, foreign law enforcement agencies, and financial institutions.

A new disclosure law takes effect on January 1, 2024, and yet very few lawyers know about it. This lack of knowledge has caused confusion and anxiety amongst legal professionals, especially since those who set up entities for their clients can face very steep penalties for failing to follow this new law.

Beneficial Ownership Information (BOI)

While the aims are all well and good, they place an additional burden on small businesses and the lawyers who assist them. In order to be in compliance with the CTA, these small businesses must report three types of beneficial ownership information (BOI) to FinCEN. Each type is described below.

Company Applicant Information

The first type of BOI is the company applicant information. Under the rules, a company applicant is defined as:

• The individual who directly files the document to create or register the reporting company; and

• The individual who is primarily responsible for directing or controlling such filing, if more than one individual is involved in the...