Beginning in January of next year, The Corporate Transparency Act aims to punish malicious actors planning to keep their ownership of a corporation through illegal means such as money laundering schemes that can land up to a hefty fine and five years in jail.
Newly formed businesses, corporations, etc. are required to report beneficial owners’ confidential information to the Financial Crimes Enforcement Network (FinCEN).
Any who have under $5 Million are also included, and noncompliance can be fined up to $500 a day or face two years in jail.
The issue is that the CTA relies on accurate self-reporting, which can be easily exploited.
The main ones affected are complicated small corporations with multiple branches, which may not be able to easily comply with the requirements.
Beneficial owners are the leader of their companies, which is an issue if they’re not present to guide their employees.
Public and Congress’ Response
Due to concerns, The National Small Business Association filed a lawsuit against FinCEN, arguing that it is unconstitutional to force companies to disclose private information to them.
This caught the attention of Congress, who are impatient with FinCEN’s lack of a clear plan.
Furthermore, Financial Services Chairman Patrick McHenry required the company to delay the rollout and finalize other parts of it such as access rules and customer due diligence data for financial establishments such as banks.
They’ve been frustrated with the company’s lack of collaboration and engagement with the public.
Many question and feel doubtful of FinCEN’s motivation for fighting against money laundering.
Needless to say, people are mixed on this new law, some feel encouraged to work harder, while others feel like it’s a way to shame and poorly treat business owners.
Many voices out their concerns and opinions on the matter, especially in regard to publicizing database information.
Source: Washington Examiner