Law firms and their clients prepare for beneficial ownership reporting
With only weeks remaining before the beginning of a new year and the introduction of “beneficial ownership” reporting obligations under the Corporate Transparency Act (CTA), many law firms are scrambling to determine how they will assist clients who may be subject to these additional regulations, according to compliance experts at CT Corporation, a Wolters Kluwer business.
“In conversations with attorneys, we learned that law firms vary widely in their readiness to address the new CTA regulation for their own firm and their clients,” writes Ross Aronowitz, Vice President, Law Firm segment, for CT Corporation, a business of Wolters Kluwer, in his American Lawyer article, “Are Law Firms Ready for the Corporate Transparency Act?”
Aronowitz notes that the consequences for non-compliance could be considerable as the U.S. Treasury’s Financial Crimes Enforcement Network, or FinCEN, prepares for the January 1, 2024 effective date.
“There is a lot at stake for the estimated 32.6 million corporations, LLCs and other entities that FinCEN expects will be impacted by the new beneficial ownership information (BOI) reporting requirements in the first year the CTA goes into effect, 2024. Qualifying companies that fail to submit beneficial ownership information may be subject to a civil penalty of up to $591 per day, a criminal fine of up to $10,000, as well as imprisonment,” he writes.
Aronowitz explains that law firms’ inconsistent readiness for the CTA extend from knowledge of the filing requirements to preparedness for the new regulation. “While some firms have dedicated committees to the planning and directing of new policies and procedures, a number of the attorneys we have spoken to have said they were not familiar with the new BOI reporting requirements,” he says, emphasizing that law firms should be prepared to answer questions that clients may have about CTA, including advising whether or not they may be exempt from the reporting requirement and how they will need to comply.
Wolters Kluwer has been fully engaged in following developments around the new beneficial ownership rule taking effect January 1, 2024. It has created a range of helpful resources such as an easy-to-use self-guided eligibility quiz, webinar presentations, and content to ensure impacted entities are able to effectively prepare for and navigate the new requirements within the target timeframe to meet their compliance obligations. More information is available on its CTA Resources page.
