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Puerto Rico legal entities urged to comply with new transparency requirements

Puerto Rico Secretary of State Omar Marrero-Díaz has issued a call to all domestic and foreign legal entities that are active and registered with the State Department to submit as soon as possible the required report under the Corporate Transparency Act, which came into effect on Jan. 1.

“It is extremely important that every corporation or limited liability company (LLC) submit an initial report directly to the Financial Crimes Enforcement Network (FinCEN) of the federal Department of the Treasury,” Marrero-Díaz said.

The Corporate Transparency Act, which was passed by Congress in a bipartisan manner in 2021, requires reporting on beneficial owners or any other person exercising substantial control over the entity’s affairs and decisions. This aims to prevent anyone from hiding or benefiting from illegally obtained gains through shell companies or other opaque ownership structures, the secretary of state explained. 

Legal entities created before Jan. 1 will have until Jan. 1, 2025, to file their initial report with FinCEN. Entities formed on or after Jan. 1 of the current year have 30 days after receiving their establishment or registration notice to submit their report to FinCEN.

Marrero-Díaz revealed that in December, the State Department electronically notified 168,577 active and registered legal entities about the transparency requirement with the U.S. Treasury, along with guidelines on how to complete the process. Among the registered active entities are 75,118 corporations and 79,781 LLCs. 

“Although the State does not have direct responsibility for implementing this law, the agency took on the task of notifying entities about the requirement,” the official said.

Under the Corporate Transparency Act, certain entities are exempt from submitting information, particularly those related to banking, credit unions, the stock market and insurance, among others. 

“There are 23 categories under which an entity can indicate its exemption to FinCEN since such industries are already highly regulated by another federal statute, such as the Securities and Exchange Act,” Marrero-Díaz explained.

In the event that an entity fails to submit the form, it may face fines of $500 per day or up to two years of imprisonment and/or a fine of up to $10,000.

“An important aspect of this law is that the top officials of the entity in question would also be liable for noncompliance under the law,” he added. “That’s why we reiterate our call for all qualifying entities to submit the form as soon as possible, not wait until the last minute.”

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