If you are a corporate secretary, company attorney, CPA, officer or other assigned person
responsible for collecting, storing and filing information with the US Department of the
Treasury, FinCEN Division, to meet the new Federal Corporate Transparency Act
If you are providing advice in “detrimental reliance” on the information provided by the
beneficial owners… then,… you need an affidavit to help protect you from liability.
The affidavit is used to verify the identity of the beneficial owners and to confirm that the
information they have provided is accurate.
The affidavit is also used to articulate the true beneficial ownership of the company (who
is really in control of the Company)… and to confirm that the beneficial owners have the
authority to act on behalf of the company.
An affidavit is a sworn statement made in writing and signed by the person making the
statement. The affidavit is a way for the company to ensure that the information provided
by the beneficial owners is true.
The affidavit is notarized by a notary public, which makes it a legal document.
The affidavit is used to protect the company from liability if the information provided by
the beneficial owners is not accurate.
In conclusion … the affidavit is a valuable tool for the company, its officers, Members and
agents to use to protect themselves from liability… and to ensure that the information
provided by the beneficial owners is true and accurate.
The CTA law will require corporations, LLC’s and Partnerships that have under $5 million in gross revenue, and under 21 employees, to file data on their “Beneficial Owners” and “Company Applicants” to the Financial Crimes Enforcement Network (FinCEN).
More importantly, the law will require the accurate and secure collection of diverse personal data that will be reported to the US Treasure Department about the owners, shareholders, executives, (“Beneficial Owners”), and corporate filers of these firms (“Company Applicants”).
There will be deadlines for providing this data to FinCEN which means now is the time to be ready…
The corporation, LLC or Partnership will need to collect this required information from its “Beneficial Owners”, which will require the “Beneficial Owners” to provide that it is true and accurate.
There will be penalties for not filing or providing inaccurate data which is why the corporation or LLC will need an affidavit from the “Beneficial Owners”, stating that the information provided is true and accurate.
The Corporate Transparency Act Affidavits come with the required affidavits to assist in collecting this needed information, in a timely manner, with a sworn statement from the Beneficial Owners that the information provided is true and accurate. The Company can safely file the data with FinCEN.
Get all your Beneficial Owners and Applicants’ information ready today by having them fill out the Corporate Transparency Act Affidavits. Make sure you are ready to file when the time comes…
Purchase Your Corporate Transparency Act Affidavits Now and get an early start.
Business owners will need to be ready for the new requirements that come with the CTA.
The CTA has been in the works for a while, but it is now law and filing will be required coming in 2022. Corporate and Limited Liability Company (LLC) Beneficial Owners will need to be up to date on what is happening with their company and make sure they are prepared when the new rules take effect.
This includes getting a handle on what they need to do in early 2022 in order to be compliant with the new regulations.
The Corporate Transparency Act (CTA) is a new Federal law that requires companies to disclose information about their actual “Beneficial” Ownership” to the US Department of Treasury through its FinCEN division.
Companies will, in addition, also need to provide information on the “Applicant” setting up the company, the “Signatory” signing the filed documents as true and accurate, and the “Preparer”. We will explain these concepts below.
The CTA legislation was passed in 2021 and this means that more information about the company’s ownership will be available for scrutiny by the US Treasury Department, banks, and law enforcement.
The company needs to prepare early and identify who are the Beneficial Owners, individual controlling the company, and the Applicant. The company also needs to determine who is going to sign (Signatory) the FinCEN filing and face potential legal issues for lying or misrepresenting ownership of the company.
In the United States, the identity of these individual(s) is not always easy to determine.
In many cases, a company’s management will be responsible to provide the data to be reported as part of the new CTA law.
By tackling this information gathering early, the company can make sure that they are not violating any laws or regulations and making themselves liable for any penalties.
Companies are responsible for collecting, storing and filing with FinCEN. These companies (corporations, LLC’s and Trusts, etc.), should have a legal document such as an affidavit, signed by each beneficial owner swearing to the truth of their information, to avoid liability.
A Beneficial Owner is natural person who has rights to the benefits of the company, not necessarily just someone who owns all of the shares of the company. There are two ways to determine if a person is a Beneficial Owner:
A company’s board members, officers or anyone who owns 25% or more of the company stock or controls the company, is considered a Beneficial Owner.
FinCEN defines this as “ownership of stock, equity interests, partnership interests, or other forms of ownership interests in a business entity that entitles the owner to profits from the entity’s activities”.
The company may also be owned by a trust, and the person who has the power to withdraw profits from that trust, is also considered to be a Beneficial Owner.
The US Treasury Department is collecting information on the natural persons involved in the ownership roles of US companies, directly or indirectly through an entity such as a trust.
Who is Responsible to Gather the FinCEN Beneficial Owner Information?
Because the responsibility to file FinCEN Beneficial Owner information lies on the company, the company needs to be able to provide, gather, store and file this information in order to comply with the FinCEN regulations.
The person assigned to gather the Beneficial Owner information varies depending on the company or organization that is requesting it. It is important to identify who will be responsible for collecting the Beneficial Owner information as one of the first steps of your best practice process. In addition to gathering the data, the company is responsible for storing this information (securely as it contains personally identifiable information PII) and providing that information to the government.
The Applicant is the person or persons who formed the company. The Applicant can be an individual, group of people, or even a trust. The Applicant is the person that began the incorporation process by registering the company with a Secretary of State or tribal organization to form a corporation. The individual(s) or firms registering companies with states or tribal organizations, are commonly called “incorporators.”
You need to know who filed your company with the Secretary of State or tribal organization when it was originally formed. This is the Applicant. There is no exception for lawyers or CPA’s that have filed the corporation or LLC (no matter how long ago, if it remains active). The new CTA law will require the Applicant to provide the same information to FinCen as a Beneficial Owner.
Approval to Use Beneficial Owner and Applicant Data
You should, as part of your best practices, have each Beneficial Owner, Applicant and Signatory execute an affidavit with the company, swearing as to the truth of the information provided and granting the company the right to use the information from these individuals in your actions and filings with FinCEN.
Preparation for Limited Liability Company (LLC) Data
A member-managed LLC should prepare for the future before it becomes a drawn-out burden. The tasks involved to file the LLC’s Beneficial Owners’ information are necessary, but not daunting. Once you update the LLC operating agreement language and get approval by a Member vote on the new requirements, you should be able to acquire the necessary data and file it with FinCen.
Storing the Data
Data must be stored in a secure location as required by FinCEN, for a term of five years from the date of filing or update. It is important to store data in a way that ensures that it is safe and confidential.
Early preparation will help to collect, validate and store the sensitive data on Beneficial Owners.
Risk and Liability
It is important for any company to understand the risks and liabilities that come with storing any personal data. Your CTA data set will contain personal information that must be protected, such as, names, addresses, email addresses, phone numbers, photo identification, and other contact information of all registered Beneficial Owners and Applicants in the United States and other counties.
This requires an understanding of what personal data is being processed, where it is stored and who has access to it. Liability for any damages can occur as a result of improper use or storage of this information.
Some of the risks include:
In order to avoid these risks and liabilities, companies should be prepared by storing the CTA Data for five years for each filing with a trusted registrar.