Memorandum to Client
(Corporate Transparency Act Compliance)

Summary

This template is a memorandum to provide your client with information regarding the Corporate Transparency Act of 2020 (as amended, the (CTA)) and with the regulations promulgated by the Financial Crimes Enforcement Network (FinCEN) thereunder. The memorandum discusses CTA "beneficial owner" reporting requirements and compliance therewith. This template includes practical guidance, drafting notes, and an alternate clause. As part of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Pub. L No. 116-283, Congress adopted the CTA. The CTA includes some of the most significant changes to the Bank Secrecy Act (BSA) and U.S. anti-money laundering (AML) laws in recent years. Those changes, in turn, will result in extensive changes to U.S. corporate governance. The CTA requires companies that are formed or registered to do business in the U.S. to file a beneficial ownership report with FinCEN – the Financial Crimes Enforcement Network of the U.S. Treasury Department. These beneficial ownership reports will enable FinCEN to assemble a massive database of beneficial ownership information. FinCEN will use its database to fight money laundering in cooperation with other U.S. law enforcement agencies. Although the FinCEN database will not be publicly available, FinCEN will make the database accessible to U.S. law enforcement agencies, U.S. financial institutions and some non-U.S. law enforcement agencies pursuant to proposed regulations that will govern access. FinCEN adopted a final rule to implement the beneficial ownership report provisions of the CTA on September 30, 2022 (the "Reporting Rule") that will take effect on January 1, 2024. The CTA, as implemented by FinCEN through the Reporting Rule, establishes a series of obligations for companies formed or registered to do business in the U.S. For more on the CTA, see The Corporate Transparency Act and Beneficial Ownership Reporting Requirement, Complying with the Corporate Transparency Act Checklist, and Compliance with Corporate Transparency Act Clause (Operating Agreement) (LLC). For related information, see FinCEN Releases Proposed Rule to Implement Beneficial Ownership Reporting Requirements of the Corporate Transparency Act: Client Alert Digest — Client Alerts.