Corporate Transparency Act: Identification of Individuals Who Exercise Substantial Control Over Reporting Companies

Following the enactment of the Corporate Transparency Act (CTA), the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) explained that the CTA and FinCEN regulations "would help protect the U.S. financial system from illicit use by making it more difficult for bad actors to conceal their financial activities through entities with opaque ownership structures." This article sets out the definition of "beneficial owner" and the filing requirements to report individuals who exercise "substantial control" over a reporting company, including indirectly or through intermediary entities. In addition, care must be taken to identify family members who direct, determine, or have substantial influence over important decisions made by the reporting company.