The Corporate Transparency Act (CTA) represents a landmark effort by the United States government to enhance financial transparency and combat illicit financial activities such as money laundering and corruption. From its inception to its implementation, the CTA’s journey has been marked by significant legislative milestones and judicial developments. Here’s a detailed look at the timeline of the CTA and its Beneficial Ownership Information (BOI) reporting requirements.
1. January 1, 2021 – The CTA Becomes Law
The CTA was enacted as part of the National Defense Authorization Act (NDAA) for Fiscal Year 2021. This legislation required certain entities to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). The goal was to establish a centralized registry of beneficial ownership information, which would be accessible to law enforcement and other authorized parties.
2. September 30, 2022 – Final BOI Reporting Rule Issued
FinCEN issued its final rule on BOI reporting, outlining the requirements for companies to disclose information about their beneficial owners. The rule specified which entities are subject to reporting, what information must be reported, and the deadlines for compliance.
3. January 1, 2024 – Original Reporting Deadlines Begin
Initially, entities created or registered on or after January 1, 2024, were required to file their BOI reports within 30 days of receiving actual or public notice of their creation or registration. Entities created or registered before this date were given until January 1, 2025, to comply.
4. December 3, 2024 – Preliminary Injunction Issued
The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction, temporarily halting the enforcement of the CTA. The court raised concerns about the constitutionality of the law, pausing its implementation.
5. December 23, 2024 – Injunction Lifted by Appeals Court
The Fifth Circuit Court of Appeals overturned the lower court’s injunction, allowing enforcement of the CTA to proceed. The court noted that the government was likely to succeed in defending the law’s constitutionality, citing its importance in combating financial crime.
6. December 24, 2024 – Deadline Extensions Announced
Following the lifting of the injunction, FinCEN extended the BOI reporting deadlines to account for the delay caused by the legal challenges:
Entities Created or Registered Before January 1, 2024: Extended deadline to file initial reports is now January 13, 2025.
Entities Created or Registered Between January 1, 2024, and December 23, 2024: These entities were granted an additional 21 days beyond their original deadlines to submit their BOI reports.
Entities Created or Registered On or After January 1, 2025: Reporting deadline remains 30 days after receiving notice of creation or registration.
7. January 13, 2025 – Updated Compliance Deadline
Entities created or registered before January 1, 2024, must submit their BOI reports by this date, marking a critical milestone in the CTA’s implementation timeline. This extension provides affected businesses with additional time to prepare and comply.
Looking Ahead
The CTA’s reporting requirements represent a significant shift in corporate transparency standards in the United States. As enforcement begins, FinCEN continues to provide guidance and resources to help businesses navigate compliance. We advise all our clients to not ignore the BOI requirements and comply with the update deadline.