The Corporate Transparency Act (CTA), passed in 2021 as part of the U.S. Anti-Money Laundering Act (AMLA), introduced a new requirement for certain legal entities to report their Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN). The implementing BOI Rule, effective January 2024, is designed to close loopholes that allow criminals to hide behind anonymous shell companies, strengthening U.S. efforts against
money laundering, terrorist financing, and tax evasion.
The rule requires covered entities such as corporations, limited liability companies (LLCs), and similar entities to disclose individuals who own 25% or more of the company or exercise substantial control. Unlike the FinCEN CDD Rule, which applies to
financial institutions, the BOI Rule directly applies to the companies themselves at formation and during major ownership changes.
This regulation is especially relevant to
corporate service providers, law firms, accounting firms, small and mid-sized businesses, and compliance teams in financial institutions, since reported data will be available to regulators, law enforcement, and (with safeguards) financial institutions conducting CDD.
