By Javiera Campos, Director of International Taxation at CCL Auditores Consultores
Read the column in Diario Financiero.
The entry into force of the Corporate Transparency Act (CTA) marks a significant milestone in corporate information privacy in the United States, as it requires the disclosure of beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), both for entities incorporated in the U.S. and for foreign entities conducting business in the country that may also fall within the scope of the CTA by being registered to operate in the U.S.
In simple terms, the CTA establishes, as of 2024, a general federal obligation to disclose the individuals who directly or indirectly control entities incorporated or operating in the U.S. This is identified as a measure aimed at preventing the abusive use of entities in the context of money laundering, corruption, terrorist financing, or any activity intended to conceal illicit operations within companies.
Such is its impact that FinCEN estimates that more than 32 million entities will be covered by the CTA, and therefore will be required to comply with these new obligations to disclose sensitive information.
In this regard, prior to the entry into force of the CTA, many states, such as Delaware, were valued when incorporating an entity in the U.S. due to their privacy standards and the fact that it was not mandatory to disclose controlling parties. Nevertheless, the CTA itself confirms that the information submitted to FinCEN will not be publicly available, which means that a certain level of privacy will still be maintained in states like Delaware, provided there are legitimate reasons for safeguarding sensitive information. Disclosure—upon request—will only be made to law enforcement agencies and other authorized parties under the terms set forth in the CTA.
Regarding compliance obligations, companies are encouraged to carefully review not only whether they fall within the scope of entities required to report (for example, LLCs established for real estate investments in the U.S.), but more importantly to analyze in advance who qualifies as a beneficial owner under the CTA. This is a broad regulation that includes not only ownership-based control (such as rights to profit distribution or voting rights in governing bodies), but also those who exercise “substantial control” over the entity. This may include, for example, managers responsible for corporate reorganizations, the opening or closing of business lines, or the sale or acquisition of significant assets. As a result, individuals holding positions such as CEO, CFO, COO, among others, may be covered.