What Small Travel Agents Need to Know About the Corporate Transparency Act

15.10.2024 - 22:25 / travelpulse.com / North America

As small businesses across the U.S. prepare to comply with new federal regulations, travel agencies should take note of the Corporate Transparency Act (CTA).

For small travel agencies structured as corporations, limited liability companies (LLCs), and other similar entities created or registered to do business in the U.S., the CTA imposes new compliance obligations.

Here’s what you need to know about the CTA, how it affects your business, and the steps you need to take to comply.

The CTA aims to prevent money laundering, terrorist financing, and other illegal activities by increasing transparency around business ownership. The new law is part of a broader push to close loopholes that have allowed anonymous shell companies to operate without accountability.

While the great majority of small businesses do not engage in criminal activities, the law still requires U.S. companies (unless they are exempt) to report information about their “beneficial owners”—individuals who own or control at least 25% of the business—to the Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of Treasury.

Failure to comply with the CTA can result in civil penalties—$500 per day, up to $10,000—and up to two years of imprisonment.

Small travel agencies often handle substantial sums of money through customer bookings, making them susceptible to scrutiny. Compliance with the CTA helps demonstrate transparency and avoid legal pitfalls, which protects your business and your clients.

The CTA exempts 23 types of entities from the beneficial ownership information reporting requirements, including publicly traded companies that meet specific requirements, many nonprofits, and certain large operating companies. Exempted entities are listed at www.fincen.gov/boi-faqs#C_2.

Unless exempt, travel agents who operate as LLCs or corporations must file beneficial ownership information reports to FinCEN. You’ll need to provide the following information about each beneficial owner:

This information must be updated whenever there is a change in ownership or control.

Unless exempt, companies formed or registered before January 1, 2024, must file a beneficial ownership information report by January 1, 2025. Companies formed on or after January 1, 2024, must file a beneficial ownership information report within 90 calendar days of notice of formation. Companies formed on or after January 1, 2025, must file a beneficial ownership information report within 30 calendar days of notice of formation.

FinCEN will maintain the beneficial ownership data in a secure, non-public database accessible only to law enforcement and certain authorized entities.

No. Most companies can submit beneficial ownership information on their own