Effective Jan. 1, 2024, the Corporate Transparency Act requires certain entities, including many small businesses, to report information about the individuals who ultimately own or control them (also known as “beneficial owners”) to the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury.

A separate regulatory requirement currently requires many financial institutions to also collect beneficial ownership information, or BOI, from certain customers that seek to open accounts as part of federal customer due diligence requirements.

ABC has expressed serious concerns with the Treasury’s FinCen’s implementation of CTA. FinCEN’s implementing regulations require millions of small businesses, including nearly every employer with 20 or fewer employees, to report personal information of their beneficial owners and update that information periodically throughout the life of the business. Failure to comply with the onerous reporting requirements could subject small business owners and employees to potential fines and jail time.

On March 1, a federal judge for the U.S. District Court for the Northern District of Alabama Northeastern Division ruled that the CTA is unconstitutional. The decision, however, only applies to members of the association involved in the suit, and all other businesses are still required to adhere to the CTA’s filing requirements. ABC has called on Congress to examine the ruling and has argued that a stay in enforcement should apply to all affected parties. On March 11, Treasury appealed the decision.

On Sept. 3, ABC joined 150 members of the Small Business & Entrepreneurship Council in a letter of support for H.R.9278, introduced by Rep. Zach Nunn, R-Iowa. This legislation would provide small businesses with an additional year to file the beneficial ownership information.

“Although filing under the CTA began at the start of this year, FinCEN reports it has received just 10% of required submissions,” the letter stated. “This compliance rate can be attributed directly to the general lack of awareness among the small business community when it comes to the new rules. Given this massive education gap, it is clear additional time is needed for regulators and other stakeholders to continue their outreach to affected small businesses." 

In the letter, ABC and the SBE Council urged House Speaker Mike Johnson, R-La., to bring H.R. 5119 to the U.S. House of Representatives floor for a vote to provide business owners and employees with more time to comply with the CTA.

A similar bipartisan bill to H.R. 5119 sponsored by Reps. Nunn and Joyce Beatty, D-Ohio, passed the House late last year, 420-1. However, U.S. Senate Banking Committee Chair Sherrod Brown, D-Ohio, stalled the legislation, putting small businesses at risk.

Information about FinCEN’s BOI reporting requirements:

• BOI Webpage
• Brochure Introduction to BOI Reporting
• Frequently Asked Questions
• Companies Exempt From Reporting
• Small Entity Compliance Guide
• How To File the Report
• Reporting Deadlines
• BOI Videos
• Beneficial Ownership Questions? Contact FinCen
• July 26 Notice to Customers of Financials Institutions About Reporting BOI

ABC encourages members and small business owners to discuss FinCEN’s BOI reporting requirements with counsel.

Please continue to monitor Newsline for additional updates.