The Oklahoma Bar Journal December 2022

fraudulent violations. 39 The CTA contains a safe harbor provision, allowing any person who submits inaccurate beneficial ownership information to file a correct ben eficial ownership report within 14 calendar days after the date the reporting company becomes aware of the inaccuracy if that per son 1) was not trying to evade the reporting requirement, 2) had no knowledge of the inaccuracy and 3) corrects the inaccuracy within 90 calendar days after the report is submitted. 40 LAWYER RESPONSIBILITIES Lawyers are ethically required to provide competent represen tation, which includes keeping abreast of changes in the law. 41 They are also required to keep their clients reasonably informed. 42 Adoption of the CTA is one of the most significant developments in entity law in decades. To comply with the CTA, lawyers must alter their practices when forming new entities. Lawyers should also advise their clients about the new duties the CTA imposes. Notifying Existing Clients Since the CTA applies to exist ing entities, lawyers must consider whether they will notify clients about the new reporting require ments and, if so, which clients they will notify. 43 For experienced transactional lawyers, the pool of clients receiving notice may be quite large. Lawyers may start by sorting the entities they have formed or advised, determining whether the entities are likely reporting companies and asking whether the entity would expect the lawyers to contact them and advise them about the CTA’s new requirements. 44 Clients with ongoing relationships would likely expect contact. Entities formed years ago with little

ownership report no later than Jan. 1, 2025. 34 Exempt entities are required to submit the beneficial ownership report at the time such entity no longer meets such exemption criteria. 35 Continuing Reporting Requirements Reporting companies are required to update any beneficial ownership changes within 30 days after the date of such change. 36 ACCESS TO THE REPORTED INFORMATION FinCEN will be responsible for storing the information collected under the CTA in a secure, private database. 37 This database will not be publicly available. The benefi cial ownership information will be available from a request only by: 1) A federal law enforcement agency; 2) A state, local or tribal law enforcement agency (if authorized by a court order); 3) A federal agency on behalf of a foreign country (if the request is under an interna tional agreement); or 4) A financial institution for The information in the database of beneficial owners will be avail able to members of law enforcement without the requirement of a war rant or other Fourth Amendment protections. It is anticipated that bank loan documents will make this authorization routine. PENALTIES FOR NONCOMPLIANCE The CTA applies civil penalties of not more than $500 for each day that a violation continues, fines of up to $10,000 and imprisonment for up to two years for willful or customer due diligence pur poses but only if authorized by the reporting company. 38

Beneficial Owners, Management and Company Applicants Each individual who is a ben eficial owner of such reporting company, [management] or a com pany applicant must submit an ini tial report to FinCEN that includes the following information: 1) The full legal name of the individual; 2) The date of birth of the individual; 3) The complete current address consisting of: a. In the case of a com pany applicant, the company applicant’s business street address of such business; or b. In the case of a benefi cial owner or manage ment, the residential street address that the individual uses for tax residency purposes; 4) A unique identifying num ber from one of the follow ing documents: a. A passport; b. A state driver’s license or c. Other identification issued to the individual by a state, local govern ment or Indian tribe; and 5) An image of the document showing the unique identi fying number. 32 DUE DATES FOR REPORTING INFORMATION Initial Reporting Requirements Reporting companies formed or registered on or after Jan. 1, 2024, are required to submit the required beneficial ownership report within 30 calendar days of its formation date. 33 Reporting companies that have been formed or registered before Jan. 1, 2024, must submit to FinCEN the required beneficial

10 | DECEMBER 2022

THE OKLAHOMA BAR JOURNAL