Legal Alert: Penalties for Non-Compliance with the Corporate Transparency Act

The Corporate Transparency Act (“CTA”) is a federal law, effective January 1, 2024, to combat money laundering and use of anonymous shell corporations. The United States Department of Treasury has created a database to be used by law enforcement and regulators to trace small and medium sized businesses. Covered businesses will need to file a report electronically with this federal database. 

Covered businesses already in existence as of January 1, 2024 do not have to file their initial reports until January 1, 2025. For new businesses formed January 1, 2024 or after that are required to report, deadlines may vary. Updates to information in the report must be filed within 30 days of the change.

Penalties for willfully violating the CTA’s reporting requirements include (1) civil penalties of up to $500 each day that a violation is not remedied, (2) a criminal fine of up to $10,000, and/or (3) imprisonment of up to two years.

Additional guidance on implementation, including the required forms and filing information, is expected in the coming weeks. We intend to follow this post up with additional compliance information as it becomes available. In the meantime, if you have any questions about the CTA, please feel free to reach out to us.