This is my fourth article discussing the federal Corporate Transparency Act, adopted on January 1, 2021 (the “CTA”). The CTA is the most significant step by the federal government to require disclosure of the owners and managers of private businesses in order to combat money laundering, terrorism financing, and other criminal activities. The CTA, as interpreted by the rules when adopted will also impose a significant burden on legitimate small businesses.
On December 7, 2021, the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued its first notice of proposed rulemaking (“NPRM”) for the CTA. As stated in the press release announcing the NPRM, “[t]he proposed rule is designed to protect the U.S. financial system from illicit use and impede malign actors from abusing legal entities, like
shell companies, to conceal proceeds of corrupt and criminal acts. Such abuses undermine U.S. national security, economic fairness, and the integrity of the U.S. financial system.”
As stated in the NPRM, the proposed rules are the first of three sets of rules that FinCEN intends to adopt to meet the requirements of the CTA. The NPRM states that FinCEN intends to issue a second set of proposed rules to implement the statute’s protocols for access to and disclosure of beneficial ownership information (“BOI”), and a third set to revise the existing customer due diligence rule for financial institutions, consistent with the requirements of section 6403(d) of the
As discussed earlier in “Waiting for Answers,” the CTA raised more questions about how they will be applied than it answered. As discussed below, the proposed rules still leave many of those questions unanswered. The proposed rules also raise potential ethical issues for attorneys.
Herrick K Lidstone Jr of MSI's Colorado law member Burns, Figa & Will, P.C's writes his fourth article on 'The Federal Corporate Transparency Act' providing further insight on this significant act aimed at combatting money laundering, terrorism financing, and other criminal activities.