On 3 December 2020, U.S. Senator Sherrod Brown (D-OH) announced the inclusion of anti-money laundering and corporate transparency reforms into the final version of the National Defense Authorization Act (NDAA), which will soon be voted on in the House and Senate. This includes language from the draft Corporate Transparency Act of 2019, which requires reporting companies to disclose information about their beneficial owners. For this purpose, a beneficial owner means an individual who (i) exercises substantial control over a corporation or limited liability company or (ii) owns 25% or more of the interest in a corporation or limited liability company, and a reporting company means a corporation, limited liability company, or other similar entity that is:
Further to the above, several specified exemptions are provided.
If approved as part of the NDAA, which is expected, the reporting requirement will apply at the time of formation or registration for any reporting company that has been formed or registered after the effective date of the regulations that will be prescribed by the Secretary of the Treasury for the implementation of the requirements. For reporting companies that have been formed or registered before the effective date of the regulations, information on beneficial owners must be submitted in a timely manner, and not later than 2 years after the effective date of the prescribed regulations. Any changes in the beneficial ownership information must be reported within 1 year of the change. The reporting will be made with the Financial Crimes Enforcement Network (FinCEN).