In a significant development for business owners across the country, the U.S. District Court for the Eastern District of Texas has lifted its nationwide injunction against the Corporate Transparency Act (CTA). This means the CTA’s beneficial ownership reporting requirements are once again in effect, and businesses must prepare to comply with the law’s disclosure mandates by March 25, 2025.
As a refresher, the Corporate Transparency Act is a federal law designed to increase visibility into who actually owns and controls businesses operating in the United States. The law requires certain entities—primarily corporations and limited liability companies—to report their “beneficial owners” to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department.
A beneficial owner is generally defined as an individual who either:
- Exercises substantial control over the company, or
- Owns or controls at least 25% of the company’s ownership interests
The CTA was enacted to address a significant gap in the U.S. financial system. For years, bad actors have used anonymous shell companies to hide illicit activities, including money laundering, terrorist financing, tax evasion, and fraud. By requiring companies to disclose who truly owns or controls them, the law aims to make it harder for criminals to hide behind corporate structures.
Most corporations, limited liability companies, and similar entities formed or registered to do business in the United States must file beneficial ownership information reports with FinCEN. There are some exemptions for certain types of businesses, including:
- Publicly traded companies
- Highly regulated entities (like banks)
- Companies with more than 20 full-time employees and $5 million in gross receipts
- Inactive businesses that meet specific criteria
With the injunction now lifted, businesses subject to the CTA must file their beneficial ownership information through FinCEN’s dedicated online filing system by March 21, 2025.
Business owners should begin gathering the required information now, including legal names, dates of birth, addresses, and identification numbers (such as passport or driver’s license numbers) for all beneficial owners.
If you own or operate a business entity formed or registered in the United States, you should:
- Determine whether your business is subject to the CTA reporting requirements
- Identify all beneficial owners according to the statutory definition
- Collect the required information for each beneficial owner
- Prepare to file through FinCEN’s beneficial ownership information system
Failure to comply with the CTA can result in civil and criminal penalties, including fines of up to $10,000 and potential imprisonment.
