Kendal Sibley, partner at Hunton Andrews Kurth, participated in a video interview during Nareit’s REITwise: 2024 Law, Accounting & Finance Conference held March 19-21 in Hollywood, Fla.
Sibley said the Corporate Transparency Act (CTA) aims to enhance U.S. government efforts in combating terrorism, money laundering, and tax evasion by requiring entities to disclose their beneficial owners.
“Bad actors can layer shell entity on top of shell entity…and there’s no way easily to unpack that,” she noted. This legislation mandates the creation of a registry for entities to report their beneficial owners, aiming for perpetual updates, she added.
Sibley said that recent legal developments, exemplified by a case in Alabama, have complicated the implementation of the CTA: “The Alabama case held that the Corporate Transparency Act is unconstitutional,” leading to selective enforcement based on plaintiffs involved.
Sibley said that entities subject to the CTA must prepare for compliance, and that for entities that were formed prior to 2024, the reports will be due in January of 2025. This necessitates gathering detailed information from beneficial owners, including their name, residential address, and identification documents, she added.
“If an entity determines that it is a reporting company, then it will need to go through the process of identifying its beneficial owners,” she said, adding it would involve collecting necessary documentation and utilizing platforms like FinCEN for streamlined reporting.