CTA Exemptions - Credit Unions

One of the 23 separate CTA exemptions that relieve exempt companies from the duty to file under the CTA is for credit unions. Previous posts have covered public companies and banks.

CTA Filing Obligations

The Corporate Transparency Act (CTA) obligates most companies in the U.S. to file a beneficial ownership report with FinCEN. FinCEN is the financial crimes enforcement network of the U.S. Treasury Department. Each beneficial ownership report must identify the company applicant who formed the company and each beneficial owner. For each individual, the report must provide the person's full legal name, data of birth, home address and a unique identifying number. The report must also provide an image of the document that provides the unique identifying number. Acceptable documents and numbers include an unexpired passport or drivers license. Because personally-identifiable information (PII) is sensitive, many companies will face an immense challenge to collect, store and compile this data. Once filed, a company must amend its report within 30 days after any change in any item of previously-reported information. Such changes might include a change in home address, or a passport or drivers license renewal. FinCEN hopes to use the CTA, however, to build a database of beneficial ownership. FinCEN would use this database to assist law enforcement in fighting money laundering. As a result, FinCEN's proposed regulations exempt many types of companies whose beneficial ownership is already regulated by the government.

Exemption for Credit Unions

Subsection 1010.380(c)(2)(iv) of the proposed regulation exempts any "credit union." The proposed regulation defines "credit union" as it is used in section 101 of the Federal Credit Union Act (12 U.S.C. 1752). While the difference between a credit union and a bank is very slight from a consumer's point of view, the legal difference between the two types is significant. Credit unions are non-profit entities that exist to provide liquidity and credit for credit union members. Banks, in contrast, are for-profit entities. Both banks and credit unions accept deposits and have deposit insurance from the U.S. government. Because of their non-profit character, credit unions only rarely change their status as such. As a result, credit unions that are exempt from the CTA should rarely need to re-visit their exempt status.

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