Are You a Mexican Shareholder of a U.S. Company? 2024 Brings New U.S. Reporting Obligations

Holland & Knight LLP Similar to the controlling beneficiary regulation in Mexico, next year the United States will enter into force a new obligation for most U.S. companies, including those with Mexican shareholders, to report information about their Beneficial Owners under the Corporate Transparency Act and its regulations (jointly, CTA). Background The CTA requires most companies in the U.S. to submit a beneficial ownership report to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) identifying their Beneficial Owners and other company information described below. Although some types of companies will be exempt from reporting, FinCEN has estimated that 32.6 million companies will be affected by this new obligation in 2024. The act’s purpose is to prevent corporations and other entities from being used as vehicles for money laundering, terrorist financing, tax fraud and other illegal activities. Failure to comply can lead to a maximum penalty of $500 per day (but no more than $10,000) and imprisonment for up to two years. Persons subject to these penalties include the Reporting Company, its senior officers, and any individual or entity responsible for filing the report. Obligated Companies Entities that have to report their Beneficial Owners include the following: corporations, limited liability companies (LLCs), limited partnerships, limited liability partnerships (LLPs), limited liability limited partnerships (LLLPs), and any company (U.S. or foreign) registered to do business in any U.S. state by filing a document with a secretary of state or similar office (Reporting Companies). If a single-member LLC is required to file with a secretary of state, it would be a Reporting Company, even if the Mexican shareholder has not opted to treat that entity as a corporation for tax purposes in the U.S. Moreover, a statutory trust, business trust or foundation also will be deemed a Reporting Company, but […]

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