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Businesses may have been spared new registration requirements as President Trump vetoed\u00a0<\/span>the National Defense Authorization Act\u00a0<\/span>(NDAA)\u00a0<\/span>for Fiscal Year 2021<\/span>, but recent House and Senate vetoes will now make those requirements a reality.<\/span>\u00a0<\/span><\/p>\n The NDAA<\/span>\u00a0is a complex piece of legislation. It<\/span>\u00a0includes the Anti-Money Laundering Act of 2020 (<\/span>AMLA)<\/span>. The AMLA in turn includes the<\/span>\u00a0Corporate Transparency Act (<\/span>CTA).<\/span>\u00a0<\/span>The AMLA\u00a0<\/span>also\u00a0<\/span>expands<\/span>\u00a0another act known as<\/span>\u00a0the Bank Secrecy Act (<\/span>BSA)<\/span>.<\/span>\u00a0<\/span><\/p>\n The<\/span> recent changes to the<\/span>\u00a0BSA overhaul financial crime monitoring practices in the<\/span>\u00a0United States<\/span>.<\/span>\u00a0AMLA\u00a0<\/span>creates a closed and<\/span>\u00a0secure central registry<\/span>\u00a0that will track \u201cbeneficial ownership\u201d in companies\u00a0<\/span>that a<\/span>re formed or registered to do business in the US. The registry will be<\/span> administered by the Financial Crimes Enforcement Network (FinCEN).<\/span>\u00a0<\/span>While the system will remain closed to the public,\u00a0<\/span>i<\/span>nformation\u00a0<\/span>collected<\/span>\u00a0under the AMLA<\/span>\u00a0and\u00a0<\/span>the\u00a0<\/span>CTA\u00a0<\/span>can be accessed and used by<\/span>\u00a0state law enforcement authorities and\u00a0<\/span>by<\/span>\u00a0\u201ca Federal agency engaged in national security, intelligence, or law enforcement activity<\/span>.<\/span>\u201d<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n Theoretically<\/span>,<\/span>\u00a0the availability of this information to these agencies will help facilitate the investigation and prosecution of financial crimes, but it will also impose a burden on US businesses to register or risk<\/span>\u00a0<\/span>civil liability of\u00a0<\/span>$500 per\u00a0<\/span>day<\/span>\u00a0that<\/span>\u00a0the violation continues<\/span>\u00a0with an aggregate limit of $250,000<\/span>, as well as\u00a0<\/span>a separate fine\u00a0<\/span>for inaccurate disclosures\u00a0<\/span>and\u00a0<\/span>imprisonment of no more than two years.<\/span>\u00a0<\/span><\/p>\n The registration requirements apply to\u00a0<\/span>“reporting companies,”\u00a0<\/span>which are<\/span>\u00a0defined\u00a0<\/span>to include<\/span>\u00a0corporations, limited liability companies or similar entities,\u00a0<\/span>and<\/span>\u00a0foreign entities registered to do business in the United States.<\/span>\u00a0The focus of the Act is on shell companies, so some typically larger institutions are exempt from registration<\/span>:<\/span>\u00a0for example<\/span>,\u00a0<\/span>c<\/span>ompanies registered with the U<\/span>nited States<\/span>\u00a0Securities and Exchange Commission\u00a0<\/span>(<\/span>SEC<\/span>)<\/span>,<\/span>\u00a0FDIC-insured financial institutions,\u00a0<\/span>entities having a U<\/span>.<\/span>S<\/span>.<\/span>\u00a0physical location and employing more than\u00a0<\/span>20\u00a0<\/span>full-time employees in the U<\/span>.<\/span>S<\/span>.<\/span>, and entities operating from a U<\/span>.<\/span>S<\/span>.<\/span>\u00a0physical location<\/span>\u00a0which have filed<\/span>\u00a0taxes\u00a0<\/span>evidencing\u00a0<\/span>more than $5 million in gross receipts or sales<\/span>. Many smaller companies, however, will be forced to file\u00a0<\/span>under<\/span>\u00a0the AMLA<\/span>\u00a0and its\u00a0<\/span>CTA<\/span>.<\/span>\u00a0<\/span><\/p>\n Once regulations are released, a<\/span>ny company that qualifies as a<\/span>\u00a0\u201creporting company\u201d\u00a0<\/span>and is not exempt\u00a0<\/span>must disclose and update the names and information of all \u201cbeneficial owners<\/span>,<\/span>\u201d<\/span>\u00a0defined as those who\u00a0<\/span>“exercise substantial control” over the entity or who own or control more than 25 percent of the ownership\u00a0<\/span>interest<\/span>\u00a0<\/span>in\u00a0<\/span>the entity.<\/span>\u00a0<\/span>Failure to file risks<\/span>\u00a0substantial financial and criminal penalties.<\/span>\u00a0<\/span><\/p>\n AMLA<\/span>\u00a0<\/span>requires<\/span>\u00a0FinCEN to promulgate implementing regulations within one year of\u00a0<\/span>its\u00a0<\/span>enactment<\/span>.<\/span>\u00a0<\/span>\u201cR<\/span>eporting companies<\/span>\u201d<\/span>\u00a0exist<\/span>ing<\/span>\u00a0<\/span>when the<\/span>\u00a0regulations<\/span>\u00a0are released<\/span>\u00a0will have two years to comply<\/span>\u00a0with the requirements.<\/span>\u00a0<\/span>\u201cReporting companies\u201d<\/span>\u00a0formed after the regulations\u00a0<\/span>are released\u00a0<\/span>must comply upon formation, and\u00a0<\/span>any\u00a0<\/span>changes in beneficial ownership information must be submitted by\u00a0<\/span>\u201c<\/span>reporting companies<\/span>\u201d<\/span>\u00a0to FinCEN<\/span>.<\/span>\u00a0<\/span><\/p>\n Companies seeking to determine whether they are \u201creporting companies\u201d under the\u00a0<\/span>NDAA\u00a0<\/span>or who need assistance with compliance can contact T<\/span>he Lynch Law Group\u2019s Corporate Practice<\/span>.<\/span>\u00a0<\/span>Please call (724) 776-8000 to schedule a time to discuss your business needs.<\/p>\n","protected":false},"excerpt":{"rendered":" Businesses may have been spared new registration requirements as President Trump vetoed\u00a0the National Defense Authorization Act\u00a0(NDAA)\u00a0for Fiscal Year 2021, but recent House and Senate vetoes will now make those requirements a reality.\u00a0 Changes To Beneficial Ownership Reporting The NDAA\u00a0is a … Changes To Beneficial Ownership Reporting<\/h3>\n
How Does This Affect My Business?<\/h3>\n
Pittsburgh Corporate Attorneys<\/h4>\n