Experts from the U.S Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and Wolters Kluwer CT Corporation participated in a recent panel discussion on preparation and compliance obligations in conjunction with Corporate Transparency Act (CTA) requirements taking effect January 1, 2024. The event, held November 8 at the Society for Corporate Governance’s Middle Atlantic Chapter Fall Conference, centered on the importance of preparation for complying with one of the most significant regulations to impact small businesses in decades.
The new reporting requirement will require millions of businesses to file a Beneficial Ownership Information (BOI) Report with FinCEN. The new rule is part of the Corporate Transparency Act, with FinCEN issuing the regulation and providing the details on who must file a BOI report, when the report has to be filed, and what information has to be reported.
Beverly Odom, Business Consultant at Wolters Kluwer CT Corporation, shared how service companies and law firms are developing processes and utilizing expert solutions to support companies and individuals who will need to comply with the federal rules. Pointing to a July 2023 Wolters Kluwer survey of 997 small businesses, law firms, and CPA firms, she noted that awareness about the rule was surprisingly low at that time, despite the significant number of companies that will be subject to the beneficial ownership reporting requirement.
“We were surprised by the lack of awareness among survey respondents on new beneficial ownership rules taking effect in just a few months,” said Odom. “Of respondents whose organization is likely subject to the new requirements, 74% acknowledged that they had not even heard of the new rule before they participated in our online survey.”
She also pointed out how this regulation is a sea change in terms of entity creation by involving the federal government which, prior to this Act, did not require notification when entities were created at the state level. It was also noted that states are not obligated to notify those who are formulating a new entity about the new BOI requirement, adding a new twist to the traditional approach in entity formulation.
“Our efforts in helping generate visibility around the new beneficial ownership reporting requirements is emblematic of how Wolters Kluwer is working across the industry to provide information, resources, and support for professional advisors and businesses to increase awareness about critical regulatory obligations such as those reflected in the Corporate Transparency Act,” said Odom.
Phil Lam, Beneficial Ownership and Innovation Chief at FinCEN, encouraged attendees to get started promptly in exploring the various resources available atwww.fincen.gov/boi, including confirming which entities are subject to the Act and the steps needed to comply.
More information on navigating the new beneficial ownership rule is available by visiting the CTA Resources page.