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Overview
Scope of the chapter. For most of its history the American LLC could be formed and operated without any public record of who owned it. The certificate of formation in Delaware and the articles of organization in Wyoming name the company and its registered agent and nothing more. Del. Code Ann. tit. 6, § 18-201(a); Wyo. Stat. Ann. § 17-29-201(b). Members are identified, if at all, in the operating agreement, which is a private contract. Beginning in 2016 that position changed in three ways at once. Financial institutions were required to identify the individuals who own and control their legal entity customers. Congress enacted the Corporate Transparency Act, which required most LLCs to report their beneficial owners to the Financial Crimes Enforcement Network. And states, foreign governments and international bodies built registers of their own. This chapter examines each of these regimes as it applies to LLCs, the litigation that reshaped the federal statute, the rules in force as of this edition, and the drafting and compliance measures that follow from them.
Three layers of collection. It helps to separate three questions that are often run together. The first is whether the LLC must file information about its owners with a government registry, which is the question the Corporate Transparency Act and the New York LLC Transparency Act answer. The second is whether a private intermediary, usually a bank, must collect that information before dealing with the LLC, which is the question the customer due diligence rule answers. The third is whether the information, once collected, is available to the public, to law enforcement only, or to persons who show a legitimate interest. An LLC may be outside the first layer and still within the second, and information collected confidentially in the first layer may be disclosed to a bank in the second. The regimes have different statutory bases, different definitions and different penalties, and a planner who reasons from one to another will make mistakes.
The federal position as of this edition. As of this edition, an LLC formed under the law of any state of the United States has no obligation to file a beneficial ownership report with FinCEN. The statute still defines such an LLC as a reporting company, 31 U.S.C. § 5336(a)(11)(A)(i), but FinCEN has exempted all domestic entities by regulation under the statute's grant of exemptive authority. 31 C.F.R. § 1010.380(c)(2)(xxiv); Beneficial Ownership Information Reporting Requirement Revision, 91 Fed. Reg. 52,508 (Aug. 14, 2026). An LLC formed under the law of a foreign country that registers to do business in a state remains a reporting company, but it need not report any beneficial owner or company applicant who is a United States person. 31 C.F.R. § 1010.380(b)(5), (c)(1)(ii). The exemption for domestic entities rests on a regulation, and a later regulation could withdraw it. The Eleventh Circuit has held the statute constitutional on its face. Nat'l Small Bus. United v. U.S. Dep't of the Treasury, 161 F.4th 1323 (11th Cir. 2025). Chapters 1, 5 and 6 note these developments where they bear on the history of the LLC, the choice of jurisdiction and formation. This chapter gives the full treatment.
Terms used in this chapter. A reporting company is an entity required to file under the Corporate Transparency Act. A beneficial owner is an individual who exercises substantial control over an entity or owns or controls at least 25 percent of its ownership interests. 31 U.S.C. § 5336(a)(3)(A). A company applicant is the individual who files the document that creates or registers the entity, together with the individual primarily responsible for directing that filing. 31 C.F.R. § 1010.380(e). BOI means beneficial ownership information. A United States person has the meaning given in section 7701(a)(30) of the Internal Revenue Code. 31 U.S.C. § 5336(a)(14). A legal entity customer is an entity that opens an account with a covered financial institution and is subject to the customer due diligence rule. 31 C.F.R. § 1010.230.