The Corporate Transparency Act (“CTA”), enacted by the U.S. Congress in 2021 and effective as of 2024, establishes a reporting obligation for U.S. entities and foreign entities registered to do business in the United States. In such report, entities must disclose the identity of their beneficial owners, i.e., any individual that directly or indirectly: (i) exercises substantial control over the entity; or (ii) owns more than 25% of the entity's equity. The first reporting date established in the CTA will be January 1, 2025.

In the context of hurricane disasters in certain areas of the United States, past October, the Financial Crimes Enforcement Network (FinCEN) granted a six-month extension of the reporting deadline to those entities with main offices in certain locations affected by the hurricanes.

Notwithstanding the foregoing, recently a group of entities and individuals in the State of Texas sued the CTA considering it unconstitutional since, according to their arguments, its issuance was the result of an overreach of the functions and powers of the U.S. Congress. Although the Court has not made a final decision on the unconstitutionality of the CTA, it did consider that the plaintiffs had presented well-founded arguments with their claim and therefore ordered, by means of a preliminary injunction, the provisional suspension of the implementation of the CTA. Although the plaintiffs had requested the injunction only with respect to themselves, the Court decided to extend the effects of the suspension nationwide. To that extent, the Court determined that FinCEN (Financial Crimes Enforcement Network) was not empowered to enforce compliance with the CTA until the constitutionality of the CTA was decided. 

Although a final decision is unlikely to be reached before January 1, 2025, and given that the U.S. Government has appealed the Court's preliminary injunction, it is recommended that obligated entities prepare and have their report ready by that date. In light of the potential consequences of non-compliance (or partial compliance) with the reporting obligation under the CTA, it is crucial to emphasize the importance of this matter: civil penalties for non-compliance or partial compliance can reach up to USD $500 for each day of non-compliance or partial compliance, while criminal penalties for intentional non-compliance may be up to USD $10,000 and up to two years imprisonment.

Brigard Urrutia´s Private Client´s team is available to assist those who need assistance in complying with the reporting requirements of the CTA for entities incorporated or registered to do business in the United States. Please contact us at EquipoGestiondePatrimonio@bu.com.co