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US Department of Treasury & Financial Crimes Enforcement Network Enacts Corporate Transparency Act

US Department of Treasury & Financial Crimes Enforcement Network Enacts Corporate Transparency Act

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Impacting Small Businesses with 20 Full-Time Employees or Less

Effective January 1, 2024, small businesses with 20 full-time or less employees – including building material dealers and suppliers – are now required to file a Beneficial Ownership Report with the US Department of Treasury and its Financial Crimes Enforcement Network (FinCEN) as part of the Corporate Transparency Act (CTA).

This law was passed in 2021 and aims to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market.

Employers with 20 full-time employees or less, or those with less than $5 million in gross sales, will now be required to disclose all beneficial owners and key decision makers within their organization to FinCEN via an online reporting system.

Any existing business who meets the above noted requirements has until December 31, 2024, to file its 2024 report.

Employers with 21 or more full-time employees or with gross sales of greater than $5 million are exempt from the law/reporting requirement.

To learn more about the Corporate Transparency Act, click here.

What Will I Have to Report?

  1. All owners, senior management and/or key decision makers within your organization
    1. This will include personal information about each person that will be searchable/viewable by the Federal Government, local authorities (i.e. police) as well as financial institutions and lenders.

According to the CTA, an individual qualifies as a beneficial owner if they directly or indirectly have a significant ownership stake in a company. This person either has a major influence on the reporting company’s decisions or operations, owns at least 25% of the company's shares, or has a similar level of control over the company's equity.

Key Point: anyone who has major influence on decisions or operations within your business will need to be listed. This will include all owners and managers but may also include bookkeepers, office managers, controllers, silent investors, anyone who has the ability to sign a contract or agreement on behalf of your organization, 3rd party vendors (i.e. an IT provider), etc.

 Recommendation: List anyone who has the ability to directly or indirectly make operational and/or financial decisions within your business.

 Where Will I File My Report?

Reports will be filed with the Financial Crimes Enforcement Network (FinCEN) at

How Should You Respond?

1. Should you qualify, you MUST file this report with FinCEN in 2024
This is NOT optional and enforcement will be STRONG!

Failure to comply can result in civil and criminal penalties of up to $10,000 and 2 years in jail.
Those failing to comply can also be issued a felony citation.

2. Begin reviewing your ownership and governance/management structure immediately.

List all individuals who have significant decision-making power over your operations.

Additionally, review any and all contracts you have in place and list who has the authority to sign these contracts/agreements.

3. Prepare to file your 2024 report - see below for more guidance!

Filing Your 2024 Report

It has been recommended that all employers file their report in December 2024

  1. BLD Connection – in partnership with the National Lumber & Building Material Dealers Association (NLBMDA) - will send reminder emails/notices starting in November 2024

Note: it has been recommended that employers wait until December 2024 to file their report as changes to the program/reporting requirements are still being made.

Once you file your report, you are immediately obligated to comply with the continuous update requirement of the law. This means that as new decision makers, owners, etc. are named and/or hired, a revised report will be required. Employers will have 30 days from any change to submit a revised report.

Special Alert: 

FinCEN has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act. The fraudulent correspondence may be titled "Important Compliance Notice" and asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages or click on any links or scan any QR codes within them.

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