The Corporate Transparency Act (CTA), enacted by the US Congress as part of the Anti-Money Laundering Act of 2020, introduced one of the most significant new compliance requirements for small US businesses in decades. It requires millions of US companies — including LLCs owned by UK and European founders — to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury.
For non-resident LLC owners, the CTA is particularly important to understand. Many UK and European founders are unaware of this requirement, having received no notification of it during their LLC formation process. Non-compliance carries serious civil and criminal penalties. This article explains what the CTA requires, who must file, and what the reporting process involves. For background on what beneficial ownership means and how the 25% threshold works, see our companion guide on beneficial ownership explained.
What Is the Corporate Transparency Act?
The Corporate Transparency Act was enacted in response to longstanding concerns from US law enforcement and financial regulators about the use of anonymous shell companies to facilitate money laundering, tax evasion, sanctions violations, and other financial crimes. Prior to the CTA, it was possible to form a US LLC in states like Wyoming and New Mexico with minimal disclosure of ownership information — something that both legitimate founders and bad actors took advantage of.
The CTA closed this gap by requiring most US companies to proactively disclose their beneficial owners to FinCEN. This information is held in a secure, non-public database accessible to law enforcement and, in limited circumstances, financial institutions. The goal is to eliminate the anonymity that made US shell companies attractive for illicit purposes, while keeping the compliance burden manageable for legitimate small businesses.
Who Must File?
The CTA applies to "reporting companies" — entities created or registered to do business in the United States by filing documents with a secretary of state or similar state office. This covers LLCs, corporations, and other entities formed under state law. Both domestic companies and foreign companies registered to do business in the US are within scope.
There are twenty-three categories of exemptions from CTA reporting. Most apply to large companies (those with more than twenty full-time employees, more than $5 million in gross receipts, and a physical US office), heavily regulated entities (banks, registered investment advisers, insurance companies), and certain non-profit organisations. A startup LLC formed by a UK or European founder for digital business operations almost certainly does not qualify for any exemption and is therefore a reporting company subject to full CTA requirements.
What Must Be Reported?
For each reporting company, FinCEN requires a Beneficial Ownership Information (BOI) report disclosing details about two categories of individuals: beneficial owners and company applicants.
Beneficial owners are individuals who either exercise substantial control over the company or own or control at least 25% of its ownership interests. For a single-member LLC, this is straightforwardly the individual owner. For multi-member LLCs, all individuals meeting either the control or the 25% ownership threshold must be reported. FinCEN's definition of "substantial control" is deliberately broad — it includes senior officers, individuals with authority to appoint or remove officers, and anyone with significant decision-making authority over the company.
For each beneficial owner, the following information must be reported:
- Full legal name — exactly as it appears on the identifying document
- Date of birth
- Current residential address — your home address outside the US is used; a US address is not required for non-resident owners
- Identifying document number — from a passport, national identity card (for non-US persons), or US driver's licence
- Image of the identifying document — a clear scan or photograph must be uploaded to the BOSS system
Company applicants are the individuals who filed the formation documents for the company with the state. For companies formed on or after 1 January 2024, up to two company applicants must be reported: the individual who directly filed the documents, and any individual who directed or controlled that filing. Company applicants do not need to be reported for companies formed before 1 January 2024.
Filing Deadlines
The CTA filing deadlines depend on when your company was formed:
- Formed before 1 January 2024: Initial BOI report was due by 1 January 2025
- Formed between 1 January 2024 and 31 December 2024: Ninety days from the date of formation to file
- Formed on or after 1 January 2025: Thirty days from the date of formation to file
After the initial report, updated reports must be filed within thirty days of any change to the reported information. This includes changes to beneficial ownership, changes to a beneficial owner's name or residential address, or the addition of new beneficial owners following a restructure. There is no annual renewal requirement — updates are only triggered by changes to the reported information.
Penalties for Non-Compliance
The penalties for wilful failure to report, or for submitting false or fraudulent information to FinCEN, are significant. Civil penalties of up to $500 per day accumulate for each day the violation continues. Criminal penalties of up to $10,000 in fines and up to two years of imprisonment apply to individuals found guilty of wilful violations.
For UK and European founders who were simply unaware of the requirement and have not wilfully evaded it, FinCEN has indicated that good-faith compliance — filing promptly upon discovering the obligation — is taken into account. However, relying on unawareness as a defence after the fact is considerably riskier than understanding and meeting the requirement from the outset. If your LLC was formed after 1 January 2024 and you have not yet filed, this should be addressed without further delay.
How to File
BOI reports are filed electronically through FinCEN's Beneficial Ownership Secure System (BOSS), accessible at boiefiling.fincen.gov. The system is free to use and does not require the services of a lawyer or registered agent to complete the filing — though many founders use a professional service to ensure accuracy, particularly given the document upload requirements and the penalty exposure for errors.
As a non-resident beneficial owner, you will use your passport as the identifying document — foreign passports are explicitly accepted. Your residential address outside the US is entered as your current address. The system is designed to accommodate foreign owners and does not require a US address for beneficial owners who reside abroad.
CTA and Banking KYC Requirements
It is worth noting that the CTA disclosure obligation and the banking KYC process are separate requirements that collect similar information for different purposes. When you open a US business bank account, platforms like Mercury, Relay, and Wise Business will ask you to identify beneficial owners and provide passport copies and address verification as part of their own compliance process — this satisfies their KYC obligations but does not constitute a FinCEN BOI filing. The two are parallel requirements and both must be met independently. For the full list of documents needed for banking, see our banking documents checklist.
Stay Compliant from Day One
We advise UK and European founders on CTA compliance as part of our US company formation service, ensuring that BOI reporting obligations are understood and met from the moment your LLC is formed. Our Enrolled Agent Richard Williams provides ongoing compliance guidance for the full lifecycle of your US entity.
Beneficial Ownership Explained
US Banking Documents Checklist
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