December 13, 2024
What You Need to Know: A new law requires many health care entities to file reports with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network with information on the entities’ key owners and leaders. Entities formed before January 1, 2024, must file by January 1, 2025.
The federal Corporate Transparency Act (CTA), which took effect January 1, 2024, introduces critical compliance requirements aimed at combating financial crimes like money laundering. Health care entities must understand their obligations to avoid significant penalties, including daily fines and potential imprisonment. Here are the essentials:
Who Does This Impact?
Health care organizations, including hospitals, physician practices and other entities, are directly affected unless they qualify under one of 23 exemption categories. Many health care entities may find it challenging to meet the "Large Operating Entity" exemption due to staffing and organizational structures.
What’s Required?
Most nonexempt entities must file a Beneficial Owner Information Report with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). Such repots include detailed personal information about “Beneficial Owners” who hold at least 25% ownership or significant control.
Key compliance deadlines include:
- Entities formed before January 1, 2024: File by January 1, 2025.
- Entities formed in 2024: File within 90 days of formation.
- Entities formed after January 1, 2025: File within 30 days of formation.
Key Takeaways for Health Care Entities:
- Evaluate Exemptions: Determine whether your entity qualifies under exemptions, such as being a wholly owned subsidiary of a tax-exempt organization.
- Identify Beneficial Owners: Ensure you have accurate and up-to-date information for filing.
- Streamline Reporting: Consider obtaining a FinCEN ID to simplify updates and filings for Beneficial Owners.
- Beware of Scams: Stay vigilant against fraudulent agents offering to file on your behalf.
Risks of Noncompliance
Failure to comply can result in fines of $500 per day (up to $10,000 per incident) and imprisonment for up to two years. CMS and other agencies can use FinCEN data to verify provider information, leading to further scrutiny.
Take Action Today
Start preparing your filing and consult with legal counsel for specific guidance. For more detailed information about filing a Beneficial Owner Information Report, visit FinCEN’s FAQ page.
This information is intended to be used for informational purposes only. It is not intended to be, and should not be interpreted as, legal advice. Furthermore, providing this information shall not create, and does not form, an attorney-client relationship between or among any parties. To the extent you need specific advice, you may wish to personally consult a qualified attorney.
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