At its mid-year meeting in February, the American Bar Association passed a resolution that brought ABA policy current in light of the enactment of the Corporate Transparency Act (CTA) in 2021, which addressed anti-money laundering. At the heart of the law, and efforts to fight not just money laundering, but terrorist financing, human trafficking and other such crimes, is disclosure of beneficial ownership. Beneficial owners are those who are the actual, behind the scenes owners of business entities.

The filing obligations under the CTA will start to become effective Jan. 1, 2024. Subject to certain exemptions, domestic business entities and foreign entities registered to do business in the United States that meet certain employee and revenue thresholds are required to report certain information relating to beneficial ownership. The CTA defines a beneficial owner as someone who either exercises substantial control over a company required to report its activities, or owns or controls 25% or more of the ownership interests of such company. The CTA does not simply cover corporations. Other forms of business entity created by a filing with a secretary of state (including LLCs and limited partnerships) are also included in the CTA term “company.”