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Corporate Transparency Act: What Small Businesses Need to Know 

Corporate Transparency Act: What Small Businesses Need to Know 

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  • Corporate Transparency Act

The Corporate Transparency Act (CTA) is a federal law and is here to ensure businesses remain safe and secure while providing greater transparency. This act is designed to help protect against money laundering, terrorist financing, and other financial crimes. To meet the requirements of the CTA, businesses must keep accurate records of their beneficial ownership information and submit them to Financial Crimes Enforcement Network (FinCEN) in a timely manner. Certain provisions of the CTA go into effect on January 1, 2024, and non-compliance could result in significant legal consequences, including civil or criminal penalties.  

It is important for small business owners to stay up-to-date with the new rules and regulations so that they can remain compliant with the CTA.

What Small Businesses Need to Know

Who does this impact?

Small business owners should be aware that their company must disclose beneficial ownership information directly to FinCEN. Certain businesses, however, may qualify for an exemption. See this link to Fin CEN’s guidance on what companies may be exempted at pages 4 - 14. Unless exempted, the following individuals must be reported:

  • Any individual who directly or indirectly owns or controls at least 25% of the ownership interests of the reporting company.
  • Any individual who exercises substantial control over the company.

What do they need to do?

Ownership interests of existing businesses must be reported by January 1, 2025, while businesses created after January 1, 2024, will have 90 days after receiving notice of their creation or registration to file their initial reports. If a business was created or registered to file their initial reports in Hawaii, that notice would come from the Hawaii Department of Commerce and Consumer Affairs (DCCA).

What to Expect When Regulations Go into Effect

Compliance Requirements

As of January 1, 2024, all existing small businesses will need to comply with the CTA reporting requirements by January 1, 2025, or face potential criminal penalties from FinCEN or other federal agencies. All businesses created after January 1, 2024, will have 90 days from creation date to comply.

Failure to Report Penalties

Companies that fail to report their beneficial ownership information could also be subject to civil penalties such as significant fines.

What Information Will You Need to Report

What to submit?

  • Company legal name
  • Any Trade Name or Doing Business As (DBA)
  • Physical address (P.O. Box not sufficient)
  • Jurisdiction in which it was formed or first registered (U.S. or foreign)
  • Taxpayer Identification Number (TIN)

Existing Businesses

In addition, if your company was created or registered before January 1, 2024, you will need to report information for each beneficial owner.

New Businesses

If your company is created or registered on or after January 1, 2024, you will need to report information for each beneficial owner and company applicant. For each beneficial owner and company applicant, you will need to provide the following for them:

  • Legal name
  • Birthdate
  • Physical address
  • Government-issued identification number, such as a social security or passport number. An image of this document bearing the government-issued number must also be included with the application.

Need Help?

If you need help understanding or navigating these changes, please visit www.fincen.gov/boi-faqs for more information.

Helpful Links for Business Customers  

  1. FinCEN Beneficial Ownership Information - https://www.fincen.gov/boi
  2. Reporting Requirements FAQs - https://www.fincen.gov/boi-faqs
  3. Key Filing Dates - https://www.fincen.gov/sites/default/files/shared/BOI_Reporting_Filing_Dates-Published03.24.23_508C.pdf
  4. Introductory Video - An Introduction to Beneficial Ownership Information Reporting Requirements
  5. Beneficial Ownership Information Reporting Rule Fact Sheet - https://www.fincen.gov/beneficial-ownership-information-reporting-rule-fact-sheet
This communication is as of October 23, 2023, and is intended to assist customers in understanding and complying with the Corporate Transparency Act (CTA) laws, regulations, requirements, and rules (collectively “CTA Rules”). This is only a general description/summary of the matters covered under certain provisions of the CTA Rules. Customers should consult the CTA Rules for complete coverage. Central Pacific Bank (CPB) is not rendering any legal, tax, accounting, business, or other advice to customers in connection with the CTA Rules, which may be changed, amended, or supplemented at any time by the federal government. Customers are strongly encouraged to seek the advice of legal and other professional advisors respecting the CTA Rules. Customers are solely responsible for determining their obligations and responsibilities under the CTA Rules and compliance with all CTA Rules. Customers shall not rely on CPB or any employee or representative of CPB respecting the CTA Rules or any interpretation or application thereof. CPB has no obligation or responsibility to update this communication as additional CTA Rules are issued or if any CTA Rules are changed, amended, or clarified. Customers must monitor the Financial Crimes Enforcement Network’s (FinCEN’s) CTA website at https://fincen.gov/boi for any updates to the CTA Rules.