Your cooperative is always looking out for your business. We are bringing this to your attention to ensure your operation’s bottom line is not affected by non-compliance with the new entity registration.
The Corporate Transparency Act (CTA), a part of the Anti-Money Laundering Act of 2020, was passed by Congress to combat money laundering, financing of terrorism, tax fraud, and other illegal activities in the United States. The CTA went into effect on January 1, 2024, requiring all corporations, limited liability companies, limited partnerships, limited liability partnerships, or a limited liability limited partnership created by filing a document with a Secretary of State or Department of Financial Institutions to register.
While there are exceptions—sole proprietorships, general partnerships, and trusts are generally not required to register and report—most exceptions will likely not apply to AgCountry member-owners.
Filing is simple, secure, and free of charge. Beneficial ownership information (BOI) reporting is not an annual requirement. Unless a company needs to update or correct information, a report only needs to be submitted once.
When and How to Register Your Entity
As of January 1, 2024, entities must register and report certain information to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) per the CTA. Companies created before January 1, 2024, will have one year (until January 1, 2025) to file an initial report, while reporting companies created or registered after January 1, 2024, will have 30 days after receiving notice of their creation or registration to file their initial reports.
Reports are to be filed electronically with FinCEN and will include information about the entity and certain owners of the entity.
Penalties for Noncompliance
There are significant penalties for noncompliance, which include failing to file or providing false information. Penalties include a civil penalty of up to $500 a day or a criminal fine of up to $10,000. Additional penalties include imprisonment for two years.
If a person unknowingly submits incorrect information or needs to update a current filing, they must file a corrected report within 30 days of becoming aware of any inaccuracies or changes to their current filing. Additionally, there is a 90-day safe harbor for inaccurate reports to be corrected if the person unknowingly submits inaccurate information, and files a corrected report within 30 days of becoming aware of the inaccuracies. If the corrected report is not submitted within 90 days of the incorrect submission, penalties may be assessed.
If you are unsure whether the CTA registration and reporting apply to you or have questions about the CTA, report timing, or the safe harbor, seek assistance from your legal counsel or trusted advisor.
This article is for informational and educational purposes and is not legal advice. Additional information and resources can be found on the FinCEN website.
