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A beneficial owner refers to an individual who owns at least 25% of a company or enough to exert significant control over it. Beginning in January 2024, the Corporate Transparency Act (CTA) will require businesses to disclose information on their beneficial owners under regulations issued by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The CTA aims to prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity.
Due to the far-reaching scope of the CTA, The Roundtable is concerned about the regulatory burden and cost it would impose on many commercial and residential real estate investment businesses.
While the CTA and its implementing regulations do not specifically target real estate businesses, it will directly impact the industry.
FinCEN estimates that the CTA will affect over 32 million entities, imposing significant new compliance burdens on beneficial owners for the first time. Historically, few jurisdictions in the U.S. mandate the collection of beneficial ownership information of corporate entities.
Additional legislation under consideration would impose anti-money laundering compliance obligations—similar to what banks face—on so-called “gatekeepers” such as law firms, investment advisers, accounting firms, and other professional service providers not currently subject to these onerous obligations.
For more information and recent updates, reference our resources below.
