CTA Exemptions - Money Transmitting Business

There are 23 separate exemptions that relieve exempt companies from the duty to file under the CTA

Previous posts have covered public companies, banks and credit unions.

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 Money Transmitting Businesses.

Subsection 1010.380(c)(2)(vi) of the proposed regulation exempts "any money transmitting business registered with FinCEN under 31 U.S.C. 5330 and 31 CFR 1022.380."

FinCEN has the authority, under the Bank Secrecy Act, to require certain categories of entities involved in the business of storing money, transmitting money and processing financial transactions, to register. Banks, credit unions and depository institution holding companies are subject to FinCEN's regulations that relate to anti-money-laundering (or AML) protections.

Money transmitting business are those that allow for the transmission of money from one person to another, falling into any of the categories listed in 31 CFR 1010.100. They include:

  • Foreign exchange dealers
  • Check cashers
  • Sellers of travelers checks
  • Sellers of prepaid access
  • Other money transmitters
Entities that are registered with FinCEN as a "money transmitting business" under FinCEN's Bank Secrecy Act regulations are exempt from the obligation to file a beneficial ownership report under the CTA.

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