057: What Nonprofit Leaders Need To Know About the Corporate Transparency Act

EO Radio Show

Welcome to EO Radio Show – Your Nonprofit Legal Resource. I'm Cynthia Rowland, and today on EO Radio Show, we are discussing a new law that will have implications for many nonprofit organizations, especially those with complex corporate structures involving business enterprises with outside for-profit investors.

In order to establish a sweeping and perpetual dragnet to aid in the policing of domestic money laundering, the U.S. Congress passed the Corporate Transparency Act, which directs the United States Treasury Department's Financial Crimes Enforcement Network, known as FinCEN, to establish and maintain a national registry of beneficial owners of every legal entity formed or registered in the U.S. with certain exceptions. These entities are referred to as reporting companies. The CTA requires reporting companies to make initial and updated disclosures of information relating to the individuals who beneficially own and control the reporting company. Willful failure to abide by the disclosure requirements of the CTA could result in civil and criminal penalties. Even if a business entity in your organization is not a reporting company under the CTA because it qualifies for an exemption, nonprofit leaders should still be familiar with the CTA's requirements in case any business entity in your organization's structure at some point no longer qualifies for an exemption and to ensure compliance with the CTA whenever you form a new business entity.

I'm happy to have my Farella colleague Greg LeSaint here to join me to give us an outline of the CTA and walk us through the Farella Braun + Martel Corporate Transparency Guide, which may help you determine whether an entity in your organization is indeed a reporting company and subject to the disclosure requirements of the CTA.

Resources:

Greg LeSaint, Farella Braun + Martel

Farella Corporate Transparency Act Guide

Farella YouTube podcast playlist

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