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.
What is the Corporate Transparency Act?
The CTA is aimed at preventing 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.
Why compliance matters for travel agents
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.
What companies are required to submit reports?
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.
What information must be reported?
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:
- Full legal name
- Date of birth
- Current residential or business address
- A unique identification number (such as a passport number or driver’s license number)
This information must be updated any time there is a change in ownership or control.
When must information be reported?
Unless exempt, companies formed or registered prior to January 1, 2024, must file a beneficial ownership information report by January 1, 2025. Companies formed on or after January 1, 2024, are required to 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.
What will FinCEN do with the information?
FinCEN will maintain the beneficial ownership data in a secure, non-public database accessible only to law enforcement and certain other authorized entities.
Must the information be filed by an attorney, certified public accountant, or other service provider?
No. Most companies are able to submit beneficial ownership information on their own using the guidelines FinCEN provides online. Reporting companies that need help with reporting obligations are free to consult with professional service providers, such as lawyers, accountants, or enrolled agents.
Who can file reports and what information will be collected on filers?
Anyone authorized to act on behalf of a reporting company—such as an employee, owner, or third-party service provider—may submit the beneficial ownership information report. When submitting the report, individual filers will provide basic contact information about themselves, including their name and email address. The person filing the report must certify that the information is true, correct, and complete.
Checklist for Travel Agents
To ensure compliance with the CTA, follow these steps:
- Determine Your Business Status. Confirm if your agency is subject to the new law.
- Identify Beneficial Owners. Identify each person who owns or controls 25% or more of your company.
- Gather Required Information. Collect the necessary details for each such owner (name, date of birth, address, and identification).
- Submit Your Filing to FinCEN: Submit the required information online at www.fincen.gov/boi.
Ongoing Compliance
If your company’s ownership changes, or if a beneficial owner’s information changes (e.g., a new address), the law requires you to update the information within 30 days. Failure to do so can result in significant civil penalties, as noted above. In addition, willful violations can result in criminal penalties.
Conclusion
The Corporate Transparency Act is a new law impacting many small businesses, including travel agencies. Compliance is critical to avoid significant fines and potential criminal liability.
For our part, Travel Industry Solutions provides the above as general information to alert you about these new requirements. We do not submit filings on your behalf and this information is not legal advice to you regarding the new FinCEN requirements.
If you have any questions or concerns, please contact FinCEN directly at: www.fincen.gov/contact or call 1-800-767-2825.
