U.S. Corporate Transparency Act and Beneficial Ownership Disclosure
On January 1, 2021, the U.S. Congress passed the National  Defense Authorization Act that also included the Corporate Transparency Act  (the “Act”).  The Act follows the intent to eradicate threats to U.S.  national security interests, such as money laundering, terrorism financing  and tax evasion. It will require newly created and existing corporate  entities to disclose information regarding its beneficial owners.  The  U.S. Treasury Department has one year to issue regulations implementing the  Act.
 Until now, requirements for beneficial ownership disclosure were determined  by the state of incorporation.  For example, Delaware, where most of  companies are incorporated, demands very little disclosure regarding the  actual owners of corporations.  This regulatory environment made it easy  to create layers of shell companies across multiple jurisdictions, thus  effectively concealing the actual ownership information.  The goal of  the Act is to create a federal standard for beneficial ownership disclosure  requirements for U.S. corporations and limited liability companies, as well  as foreign entities that register to do business in the U.S.  The Act  does not require disclosure from entities (1) employing more than 20 full  time employees, (2) that filed U.S. income tax returns showing in excess of  $5mm in gross receipts or sales, (3) operating in a physical office, and  certain other entities.
 For the purposes of the Act, a beneficial owner is an individual, who  directly or indirectly (1) exercises substantial control over the entity, or  (2) owns more than 25% of its equity.  The disclosures, including also  the personal information of each beneficial owner (such as name, birth date,  address, a U.S. passport or driving license number), will not be publicly  available, but will be provided to Federal or state agencies, as well as to  financial institutions for the purposes of compliance with customer due  diligence obligations, provided that the customer agreed to grant access to  such information to the financial institution.

Willful non-compliance with the Act will be punished by significant civil and  criminal penalties.  
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