discussing effecctive date of Corporate Transparency Act

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Our International Business Planning Attorneys Discuss What You Need to Know About the Implementation of the CTA

On January 1, 2024, the Corporate Transparency Act (CTA) enacted in 2021 will become effective. Passed with the goal of enhancing transparency in corporate ownership, the CTA is intended to combat illicit financial transactions. At MEG International Counsel, we are urging all of our Mexican clients with business interests in the United States to consult our international business planning attorneys to ensure they are in compliance with this new law.

Key Terms Our High-Net-Worth Mexican Clients Need to Know

Reporting entities under the CTA include corporations, limited liability companies, and other similar entities formed pursuant to the laws of a state or under the laws of a foreign country but registered to do business in the U.S.

Beneficial owners are defined as individuals who directly or indirectly exercise "substantial control" over the entity or own/control at least 25% of the "ownership interests" of the entity unless they meet one of these five key exceptions:

  • A creditor of the entity
  • A person with control derived solely because of their employment status
  • A person acting as an agent on behalf of another individual
  • Anyone whose only interest is through a right of inheritance
  • Minor children, if information is reported for their parent or guardian

Why the Corporate Transparency Act Was Passed

Over 2,000,000 corporations and limited liability companies are formed each year in the United States. Without any requirement to disclose the identity of the people who directly or indirectly control these companies, unscrupulous individuals can use them to commit tax fraud, launder money, finance terrorist activities, or fund human and drug trafficking.

The CTA aims to stop illicit financial transactions by requiring the identity of beneficial owners to be reported to the Treasury Department’s Financial Crime Enforcement Network (FinCEN). If necessary, FinCEN may share this information with law enforcement or financial institutions.

Important Deadlines for Mexican Entrepreneurs and Investors With Business Interests in the United States

Corporations formed before January 1, 2024, have until January 1, 2025, to file an initial beneficial ownership report to FinCEN.

Businesses formed after CTA implementation on January 1, 2024, will have 90 days after notice of registration or after the secretary of state provides public notice of the business’s creation to file their report—whichever is earlier.

If there is a change in ownership, a report must be filed within 30 days. 

Information about filing, how to request an exemption, and the steps you must take to maintain regulatory compliance can be found on FinCEN’s Beneficial Ownership Information website.

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