recorded webinar

CORPORATE TRANSPARENCY ACT: WHAT YOU SHOULD KNOW

On January 1, 2021, the U.S. Congress enacted The Corporate Transparency Act (CTA). It established new beneficial ownership reporting requirements for both existing companies and companies formed, making compliance critical for all companies that fall within the scope of the CTA. Any violations could carry harsh penalties.

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Join CSC Associate General Counsel Paul Hodnefield for an exclusive webinar designed to provide a high-level overview of the CTA. Specific topics include:

  • Which companies have to report beneficial ownership information and what information is required

  • How beneficial ownership information will be submitted

  • Required update reports

  • Penalties for non-compliance

  • Issues to be resolved by Treasury Department regulations

  • Timeline for implementation

CSC CSC RESOURCES

WEBINAR TRANSCRIPT:


Annie: Hello, everyone, and welcome to today's webinar, "Corporate Transparency Act: What You Should Know." My name is Annie Triboletti, and I will be your moderator.

Joining us today is Paul Hodnefield. Paul is the Associate General Counsel for CSC, where he is responsible for advising the company regarding real estate recording, notary, Uniform Commercial Code, and other public record transaction services. And with that, let's welcome Paul.

Paul: Thank you. Well, the presentation today is on a very significant new law for those who form entities or have existing entities for that matter. It's the Corporate Transparency Act. It's the first law that imposes national standards for company formation, and it will be significant. And it's something that anybody who deals with company formation or qualification or just company record maintenance and compliance will need to know about.

So what I'm going to do today, in talking about the Corporate Transparency Act, I'm going to begin by providing a bit of introduction and background on the Act. I'll talk about the reporting requirements under the Act, what information needs to be disclosed as part of the reporting, what the filing office duties are under the Corporate Transparency Act, and penalties for non-compliance as well as some other issues, and, hopefully, we'll have some time for Q&A.

I mean, one disclaimer I want to get out there before we go into the program. The law is fairly new. It was just enacted in January, and Congress left many of the Corporate Transparency Act specifics to be resolved by Treasury regulation. The Treasury Department is already working on it. And because so much was left to regulation, there's a lot more information that will be coming out over the next year. In fact, there was some breaking news yesterday, which I will incorporate into the presentation as I go.

So what this presentation is, is a summary of the law as we know it today. Please know that it will change. The information will change, and we will provide you with updated information throughout the year. So please check back with us from time to time.

Now, historically, state incorporation laws in the United States allowed parties to form entities without disclosing who owned them, who controlled them, or who benefited from them. This allowed savvy criminals, terrorists, tax evaders, and others to use the situation to their advantage. These bad actors learned how to use shell companies and multiple layers of corporations, LLCs and other entities to launder money, cover their tracks, and then conceal their identities. This really frustrated investigators' attempts to follow the money and determine the ownership of entities as they were looking into these situations.

And the result of that was actually going back to about 1989 the G7 formed an international organization called the Financial Action Task Force on Money Laundering. And this task force provided some international standards for disclosure of beneficial ownership information. And many member countries began adopting those recommendations.

Now as far as the United States went, the United States did not. The individual states generally did not adopt these recommendations. And in 2006, the task force released a report that was highly critical of the U.S. because it did not require beneficial ownership information at company formation or for existing entities. And this was frustrating in international efforts to deal with terrorist financing, money laundering drug money, things like that. And as a result, the report really triggered some action by Congress.

The first attempt at beneficial ownership disclosure legislation was it began about 2006. Senator Levin from Michigan introduced a bill. And that bill would have required the secretaries of state or their equivalent in other states, like the department of licensing or department of financial institutions, whichever entity in a state or Indian tribe is responsible for company formation, and this would have required these offices to collect beneficial ownership information and share it with the Financial Crimes Enforcement Network or FinCEN. And I'll come back to FinCEN in a minute because it's important to understand what FinCEN is.

Now the early legislation was strongly opposed by the secretaries of state through their national organization, which is the National Organization (sic) of Secretaries of State or oftentimes called NASS. And the secretaries had good reason to oppose it. First of all, they weren't set up to collect this type of information. It would have required them to change their systems. But perhaps more importantly, they didn't want this information. They didn't want to be responsible for maintaining personal information on beneficial owners and all the duties that go with maintaining such information. And there were other reasons as well.

And actually, NASS pointed out that the federal government already has this information. The IRS collects it as part . . . They have a form for it, an SS-4. And so NASS said the federal government already has it, why not share that information?

So NASS fought this bill for quite some time, and along the way there were modifications proposed. For example, there was a bill that would have allowed the IRS to share beneficial ownership information with law enforcement, the information they collect on that SS-4 form. And even a proposal that would have required registered agents to collect beneficial ownership and report beneficial ownership on the companies.

But what it eventually morphed into was the Corporate Transparency Act. And the Corporate Transparency Act requires reporting to FinCEN, which I mentioned just a minute ago and because FinCEN plays such an important role in this I want to cover what FinCEN really is.

As I said, it's the Financial Crimes Enforcement Network. It is a part of the Department of Treasury, and its mission is to safeguard the financial system and combat money laundering. And it does this by promoting other national security interests through collecting data and dissemination of financial intelligence and other information to law enforcement, national security, and other government actors that can use this information for good.

Now the Corporate Transparency Act, as it made its final form, what it does is it adds a section to the Monetary Transactions Law. I should add that the Corporate Transparency Act that worked its way through Congress, it was finally tacked on to the National Defense Authorization Act last fall. And that act, which funded the military and other things, was vetoed by President Trump in December, but Congress overrode the veto on January 1st.

So the Corporate Transparency Act was enacted on January 1st. It adds Section 5336 to 31 U.S.C. And what the Act will do is it'll place disclosure obligations on what are called reporting companies. This is a new concept, and I'll explain what they are in a minute. And these reporting companies must report to FinCEN certain personal information for beneficial owners and, another concept that's defined in the act, an applicant.

Now the Act classifies beneficial ownership information as sensitive information, which places obligations on the Treasury Department and FinCEN to maintain security and strictly limit access. In addition, they have to provide an audit trail of requests for the beneficial ownership information. And again, I'll go into more detail on all these things in a minute.

It does place some duties on the secretaries of state around the country, but they are fairly minimal. There isn't a lot that they have to do, but it does place some obligations on them.

And the Act has some fairly substantial penalties for failure to comply, both civil and criminal. And it breaks these up into two different types of violations that are subject to penalties. One is the reporting violations. And the other has to do with disclosure violations, where somebody uses or discloses information that is protected under the Act.

Now, some of these concepts are not entirely new, and some states did take the initiative and begin even long before the Act was passed collecting beneficial ownership information. For example, Delaware has certain requirements regarding beneficial ownership information. D.C. requires reporting of beneficial ownership information at the time of formation. And there's been legislation out there requiring, for example, an LLC to report beneficial ownership information anytime it acquires real estate because that had been an issue with money laundering as well. But this will provide the federal standard for beneficial ownership reporting. Whether it will preempt the state requirements remains to be seen.

So what exactly are these reporting requirements? Well, first, we got to look at some of the definitions that are involved here in who has to report and what the reports entail.

First of all, and this is an important concept that's defined in the Act and that's the concept of a reporting company. Now a reporting company means, under the Act, a corporation, LLC, or similar entity that's created by filing a record with the secretary of state or similar office in territories and Indian tribes, and, you know, articles of incorporation, certificate of organization, or whatever the terminology is under the particular state law. It also includes a corporation, LLC, or similar entity that's formed under the law of a foreign government and registers to do business in the U.S. by filing some sort of registration information, either with the secretary of state or with the similar office at a territory or tribe.

Now, one question that has to be resolved by regulations is what is a similar entity, and we don't know yet. It probably includes things like limited partnerships, maybe statutory trusts, business trusts, and that type of thing. We'll wait and see. We have to wait for the regulations to come out. And I know that, based on recent information, that this will be one of the things that's addressed by the regulations when they come out.

Now, there are exclusions to the definition of reporting company. And, in fact, there are lots of definitions or lots of exclusions to the definition. I counted 24 exclusions from the definition of reporting company. I have seen and heard other presenters say things like there was 23 or up to 26. So it depends, I guess, on interpretation. And I think that interpretation is ultimately going to be defined by regulation.

But there are some general rules that we can draw from this when it comes to exclusions. As a general rule, the businesses that are excluded from the definition of reporting company are those that are already subject to regulation. So for example, it appears that financial institutions are not going to be subject to being reporting companies because they're already typically under the regulation of the Comptroller of the Currency or other state equivalent.

Companies that are subject to Securities and Exchange Commission regulation, insurance companies, public utilities and other similar entities, certain types of investment companies. So there's a wide range of entities that will not fall into the definition of reporting company. And again, we are hoping that the regulations will provide greater clarification.

There are some other exclusions as well. Dormant companies, for example, under certain circumstances, as well as any entity with more than 20 employees that filed a U.S. income tax return the previous year showing at least $5 million in gross receipts and has a physical presence or a physical office in the United States that's actually in operation.

It is also possible here, by the way, that FinCEN or Treasury will expand the list of exclusions over time through regulation, as they gain experience with the reporting requirements. The goal in the reporting requirements is to keep it as simple as they can. We'll see how close they are at being able to do that. But it is possible that they could expand the list of exclusions, and they have statutory authority to do that.

One of the big questions that's going to come up, once the Act takes effect, is does a particular company fall within one of the entities excluded from being a reporting company? And this is going to be a big gray area because the secretaries of state will not be able to answer that question. They simply are not going to have that information. And FinCEN will not be able to answer that question. Based on the information that we learned from a meeting yesterday, they are not going to be providing that type of guidance. In fact, FinCEN said that the individual entities are going to have to look at a number of different channels to determine whether they're subject to the reporting requirements. So this is probably going to require consultation with legal counsel for a company to make that determination.

Now, the reporting companies will have to report beneficial ownership information. Actually, they'll also have to report for applicants, but both beneficial owner and applicant information.

Now, what is a beneficial owner? The Act defines "beneficial owner" as an individual who either exercises substantial control over the entity or owns or controls at least a quarter ownership of the entity. There are some exclusions from beneficial owner as well. A minor child, for example, is not a beneficial owner if the parent or guardian is required to report under the Corporate Transparency Act. Under certain circumstances, an individual acting solely as a nominee, agent, and other things on behalf of another individual. An individual who is solely an employee and their economic benefit from the entity is derived solely from that employment status. A person who inherits the right, and a creditor. However, it is possible that a creditor could fall within the definition of beneficial ownership if but they meet one of the two criteria, including exercising substantial control over the entity. So at what point that would happen? We're hoping will be defined in regulations at some point, but we don't know yet currently.

I mentioned that a reporting company also has to report on applicants. Applicant means an individual who either files the application to form an entity or registers or files the documents necessary to register a foreign entity, you know, a corporation, LLC, or similar that's formed under foreign law so that they can do business in the United States. So this one has some ambiguities.

For example, would the definition include the incorporator that signs the documents submitted to form the entity? Or would it include the law firm that submitted documents on behalf of a client to form an entity? Is it possible that annual reports would fall within the registration listed above? Probably not, but you never know. That's going to be determined by regulation. Also could service companies, such as CSC? We're concerned that we could fall within the scope of that definition. We're waiting to see. The regulations should be helpful in clarifying who exactly would be an applicant under the law.

Now the reporting company must provide a report for both beneficial owners and applicants, and that report must include certain information that will include . . . and so the report is going to identify each beneficial owner and each applicant by full legal name, date of birth, their current address, which according to the statute or the Act can be either a business address or residential address, and finally a unique identifying number from an acceptable identification document. An acceptable identification document is partially defined in the Act, of course a state issued driver's license, passport, things like that. In the alternative, a FinCEN identifier may be provided. More about that in a moment.

Now if an exempt entity has an ownership interest in the reporting company, all the reporting company has to do is provide the name of the exempt entity. So it is quite possible that a reporting company might have exempt entities as part of its ownership structure.

I mentioned the FinCEN identifier a moment ago. The FinCEN identifier is a unique identifying number issued by FinCEN to an individual person under the provisions of the Act. It is issued upon the request of an individual, and the individual who requests it has to apply and provide FinCEN with all the same information that would be required for a beneficial owner or applicant. And FinCEN will issue one identifier per individual. They won't issue more than one to an individual. And once the individual has been issued a FinCEN identifier, they can simply provide that in lieu of all the other information. But they have to keep the information that they provide to FinCEN up to date, which means filing reports anytime there's changes to the information required by FinCEN for the unique identifier.

Now these unique identifiers are going to be used, as I said, in lieu of reporting all the information required for a beneficial owner or applicant. And this will come in very handy for individuals that are involved in a lot of company formations. If it's a regular part of somebody's job, this will be a way to minimize the reporting obligations, and also it makes it easier to change information because it can just change by the person with the identifier updating the identifier information rather than it appears rather than going to every individual entity for which the FinCEN identify is used and file an update report. But along that line we're going to have to wait and see what the regulations hold.

As far as the timing of the report, once the law takes effect, newly formed entities and entities that are formed under the law of a foreign government and register for the first time will have to report the beneficial ownership and applicant information at the time of formation or registration. Now, exactly at the time, I think that's open to interpretation. This will have to be resolved by regulation, but I would expect there would be some sort of grace period in which to report, perhaps a few days after formation. We'll wait and see what the regulations have to say about that.

As far as existing entities, those that come into existence anytime before the Corporate Transparency Act takes effect, if they're a reporting company, they will have to report within two years following the effective date of the regulations, which we expect to be January 1st, 2022. So two years after the Act takes effect, they will have to report the beneficial ownership and applicant information.

Now, beneficial ownership and applicant information can change over time, and the Corporate Transparency Act takes that into account. It does provide for reporting on changed or updated information on beneficial owners and applicants. And in fact, the statute says an updated report is required for any change in beneficial ownership information. Exactly what constitutes any change? It's possible the regulations might determine that any change means any material change. But we'll have to wait and see what the regulations have to say.

Now, in the Act, the Act says that the reporting company must submit the changed information not later than one year after beneficial owner or applicant information changes. However, that is something that might change over time because the Act does allow the Treasury regulations to provide for a shorter period. So we'll wait and see what that might be. And it could change after the Act takes effect as well, because the Treasury Department will be in the first couple of years constantly reviewing performance of the regulations and making adjustments as necessary.

So all this information is provided to FinCEN, and FinCEN is warehousing it in their database. And the reason they're doing so is so they can disclose it to those that have a right to request it under the Corporate Transparency Act. So it's important to know where that information might be disclosed, who might get access to it.

Well, there's really three broad groups that can get access to that information. One is federal. The federal government can request it. Certain people within the federal government can request it. So FinCEN may disclose beneficial ownership information upon request by a federal agency that's engaged in national security, intelligence, or law enforcement activity, as long as the request is in pursuit of such activity. So the disclosure is limited and the use of the information is limited to the specific purpose for the disclosure.

Federal agencies can also request the information on behalf of a foreign government's law enforcement agency, a prosecutor, or a judge if there is an international treaty that provides for that or if there's other specified circumstances in the Act.

It can also be released by FinCEN upon the request of a federal functional regulator, and we'll see what the regulations say. The regulations will provide protocols for requesting and disclosure of information and hopefully will clarify what federal agencies can request it even further than what the Act provides.

Now at the state level, state level law enforcement . . . and by state, "state" is defined broadly in the Act. It means a U.S. state, territory, or tribal jurisdiction. So if a law enforcement agency from one of these local jurisdictions requests it with approval of a court of competent jurisdiction, then it can be released for use in a civil or criminal investigation. So it can be released to local government for civil and criminal investigations.

Finally, FinCEN information can be disclosed to financial institutions that are under customer due diligence obligations. So it can be upon the request of the financial institution if it has to do customer due diligence, but there's a qualifier to that. The financial institution must first obtain the consent of the reporting company to get access to the reporting company's beneficial ownership information.

Now, one thing I want to mention is what impact this will have on state filing offices. I mean, the secretaries of state and NASS were all concerned about additional obligations that this would throw on them. And the Corporate Transparency Act largely addressed those concerns. But there are some duties that will be placed on the state level filing offices, including territories and tribes.

So what are these obligations, and who do they apply to? Well, it applies to the office responsible for forming entities in the particular jurisdiction or formation or registration, I should say. So it's going to be the secretary of state or the equivalent office, depending on the particular jurisdiction.

Now, what exactly are these obligations? They pretty much all fall into notification obligations. So the filing office will have to cooperate with the federal government and with FinCEN to provide notice to people (a) when they form or initially register a company under the law of the particular jurisdiction, so at the time they file the articles of incorporation, things like that. Also, the Act says that the notice will be required if the filing office is assessing an annual fee or renewal of a business license at the state level with the secretary of state or a corporate tax assessment. So the specific triggers for the filing office providing notice will have to be clarified in the regulations.

As far as the contents of what the filing office will have to provide to the entity that's being formed or the applicant, it's going to provide a notice of what the requirements are of reporting companies, including the requirement to keep the beneficial ownership information updated. The report or the notice has to include a copy of the form developed by FinCEN for reporting beneficial ownership information, or at least a link to the online version and electronic version of the form. And it must state that the notification is being made on behalf of the Treasury Department and include an explanation of what's the purpose of these reporting requirements.

But it really doesn't quite stop there. There are some additional obligations that are placed on the filing offices. And these are statutory requirements that the filing office has to comply with. One is that they have to update their websites so that the pages that people forming entities and other purposes related to business entities are going to visit that these have notices of the reporting requirements. And they would include the link to the electronic FinCEN version of the form.

In addition, the filing offices will have to update their forms to include notices. And finally, they'll have to update their physical office. Now this might not be particularly burdensome, because really what it amounts to is posting the required notices in the physical office of the secretary of state or equivalent office. And the posted notice will be very similar to the notice that they must provide at the time of formation and things like that.

Now, as I mentioned, there was some breaking news yesterday. NASS had a call with FinCEN and others involved in developing the Treasury regulations for the act. And based on that call, the secretaries are concerned about the types of questions they'll get. They already are getting questions, but they are concerned that they're going to be getting questions on reporting compliance and potential liability. Secretaries of state are not going to probably be answering these questions because so much will be dependent on the specific facts and circumstances. So their duty is not to answer these questions, only to notify. But they do want FinCEN to put out a frequently asked questions document to assist them. So we'll see if they do come out with that sometime before the Act takes effect at the beginning of next year.

So there's all these different reporting requirements and disclosure limitations, and the people subject to the Act have to comply with them and failure to comply carries some penalties. And those penalties can be fairly harsh. So I want to cover what those penalties are under the Act.

There are two types of violations. There's reporting violations, and there are disclosure violations.

First, reporting violations, these are defined as either willfully providing or attempting to provide false information to FinCEN, false or fraudulent information I should say, or willfully failing to provide complete and updated information basically to try and avoid the reporting requirements.

Now, somebody caught willfully doing this faces civil penalties of up to $500 a day for non-compliance. So this can add up in a hurry, and it can wind up being a substantial penalty. But willful violations also potentially carry criminal penalties, and that can include imprisonment for up to two years and a fine of up to $10,000.

However, FinCEN says that they're not trying to require perfection with the compliance standards. They don't want to create technical violations that would lead to people falling subject to penalties simply because they didn't do every step of the process perfectly.

With that in mind, there is a safe harbor built into the Act that says if somebody realizes that the report isn't accurate, they can submit an updated report within 90 days without penalty. But this assumes the person wasn't trying to evade the reporting requirements and they didn't report knowledge that they knew was false or inaccurate. So there is this safe harbor, and regulations are going to be important here too. We'll wait and see what FinCEN comes up with or the Treasury Department comes up with for the regulations that would apply.

Now, as I mentioned earlier, the Act labels the beneficial ownership as sensitive information. So it's subject to limits on access and disclosure as well as use of that information. It's protected information. And there are some substantial penalties for unauthorized disclosure or use of this information. So there are disclosure violations, and these violations make it unlawful to knowingly disclose or knowingly use beneficial information that the person obtains through any report submitted to FinCEN or any disclosure made by FinCEN.

And if a person runs afoul of this law, there are civil penalties again up to $500 a day for the violation until it's remedied. And there are criminal penalties. And the criminal penalties here get much more harsher than for reporting violations. It includes imprisonment for up to five years and up to a quarter million dollar fine. But it doesn't stop there. If the person discloses or uses the information as part of a scheme of illegal activity, the penalties can be enhanced for up to 10 years in prison and a half million dollar disclosure. Now for the enhancement, the disclosure use has to be done while violating another law as part of a pattern of illegal activity, and it has to involve a scheme involving more than $100,000.

So now I want to move on and talk about some other issues that are raised by the Corporate Transparency Act. There are a few issues that we're waiting to see that will have to be resolved by regulation. As I've mentioned throughout the presentation, there are several of them.

One is as far as the definition of reporting company, what does "or similar entity" include when it talks about corporations, limited liability companies, or similar entities? How far does that go? Does it include limited partnerships? Would it include general partnerships? That creates an issue because they may not have to report anything. They aren't formed by registration or filing articles necessarily. Business trusts, statutory business trusts, like a Delaware or Massachusetts business trust, these fall into that type of category. We have to wait and see.

Who is an applicant under the Act? Does it include law firms, service companies, and parties that sign the articles or other documents that are submitted to form or register an entity?

What does it mean for a person to have substantial control over the entity for purposes of the definition of beneficial owner? I don't know what substantial control really means. It's not defined in the in the Act. We'll wait and see.

The deadline for updated reports. The Act does allow FinCEN to shorten the one-year time period for submitting changes. Will they do that? And will they do it right from the get-go, or is that something that they will revise over time?

There are a number of additional issues to be concerned about as well. Federal contractors. There is a provision in the Act that tells the Treasury Department or that requires revision of the Federal Acquisition Regulations so that federal contractors and subcontractors that are reporting companies, these will have to disclose beneficial ownership information at the time they submit a bid or proposal for contracts in excess of $250,000. So they'll have to actually include it as part of the bid or proposal. There are some exceptions noted in the Act. But we're going to have to see what happens with the Federal Acquisition Regulations, what's going to be required and things along that line.

One other thing the Act does is it prohibits the issuance of bearer shares. So a corporation, limited liability company, or similar entity cannot issue certificates in bearer form evidencing an ownership interest in the entity. And this is to prevent circumvention of the Corporate Transparency Act through the use of bearer shares.

Another and this is a big issue that has to be resolved by the regulations and that is what is the method of reporting? Well, is FinCEN going to set up an electronic filing system for this? I think there's a very good chance they will, because in doing a little bit of research, I found that FinCEN has been mandating electronic filing of a number of other reports that are required to be submitted with that entity, and they've been doing it for nine years. So I think there's a very good chance you're going to have an electronic filing capability.

Will they set up a direct link with service companies or law firms and other entities that are involved in setting up companies all the time? I don't know. We may have to wait for the first version of the regulations to come out and public comment to see if they're open to allowing entities that are involved with forming companies to directly submit without going through, say, a web page.

Paper. The Corporate Transparency Act mentions forms a couple of times, primarily in the secretary of state obligations. So the Act seems to contemplate that paper forms will be available, but, ultimately, it's up to regulation and really whether Treasury and FinCEN decide to accept paper as part of this. They could mandate electronic filing. We'll have to wait and see. But that's something that the regulations are going to have to clarify.

So finally, today, I want to run through the timeline. What's going to happen with the Corporate Transparency Act and when, as far as we know anyway? Now when I prepared this slide a couple days ago or since I've prepared it, there have been some changes. So I'll highlight those as well.

First of all, the Act, it was passed by Congress on January 1, 2021. That act required the Treasury Department to adopt final regulations within one year, by January 1, 2022. So the rulemaking process is now underway, and we learned yesterday, on the call between NASS and FinCEN, that the first draft may be available by the end of this month. So the early indications we had were that it might be May, but now this seems to be accelerated. So we're thinking that the first draft of the regulations will be available sometime around later this month or sometime in early April, and Treasury then would issue an advanced notice of proposed rulemaking and then provide a public comment period on that.

After that public comment period, we expect that a notice of proposed rulemaking, the next step with a with a proposed final draft of the regulations will be released not in the autumn of 2021, but now it looks like it might be summer, sometime around July. So accelerate that by a couple of months. And that would include the actual text of the rule. And again, it will have a comment period.

But it looks like Treasury is on track to adopt the final rules, and they expressed that they do expect to adopt the final rules with an effective date of January 1st, 2022.

Now, the early drafts, the indication of what Treasury is addressing in the first draft of the rules includes what types of entities will be reporting companies and what might be excluded. It also will include the process for reporting and the protocols for reporting and disclosure of information, as well as some of the time frames that I've talked about here for updated reporting and things like that.

Once the regulations take effect, then companies will begin to have to report. So companies formed, assuming that the new regulations take effect on January 1, then any company formed on or after January 1 must report beneficial ownership and applicant information at the time of formation. Again, any reporting company I should say that's formed on or after January 1. As far as existing companies, anything that was formed before January 1, 2022, they're going to have two years to submit the report. So reporting companies that existed before, that were formed on December 31st, 2021, or any time earlier, if they're a reporting company, they'll have until the end of 2023 to report beneficial ownership information.

Now, the rulemaking process will begin for certain other actions after the final rule takes effect. For example, the Treasury Department will work on the customer due diligence regulation modifications to account for the Corporate Transparency Act after January 1, 2022. And there'll be some other issues that will have to be addressed at that time.