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Congress Imposes New Disclosure Requirements for Beneficial Ownership of Corporations and LLCs

Another new federal law, the Corporate Transparency Act, will require most small corporations and limited liability companies to disclose to the federal government information on the beneficial ownership of the entity – that is, the actual persons who own and control the entity. The government will be allowed to disclose this information for authorized law enforcement investigations, but it will not become public.

This new requirement will directly affect many cooperative and condominium owners, because it is increasingly common for apartments to be purchased and owned by single-purpose entities for tax and privacy reasons. Most of these entities will be required to disclose beneficial ownership information to the Financial Crimes Enforcement Network upon formation. Existing entities will also have to file this information within two years after final federal regulations implementing the new law are issued. Willfully providing false information in these reports will be a federal crime, punishable with fines of up to $10,000 and/or prison terms of up to two years. We will report in this Client Advisory when the regulations are issued later this year.