March 9, 2021
Authored by: Melissa Sprinkle and Lana Hompluem
On January 1, 2021, Congress enacted the National Defense Authorization Act (the NDAA”). One portion of the NDAA includes the Corporate Transparency Act (the “CTA”), which is described as the most comprehensive anti-money laundering legislation passed in the United States and which regulates the use of anonymous entities for money laundering, tax evasion, and financing terrorism. The CTA requires certain entities, including limited liability companies, corporations, and “similar entities,” to disclose their individual owners and their “beneficial owners”, meaning those who own or control at least 25% of the entity. The legislation is aimed at preventing these “shell companies” from hiding illegal activity.
The statute states that the CTA only applies to entities that are created by filing a document with a secretary of state or a similar office, or are formed under the laws of a foreign country, but are registered to do business in the United States through