Many attorneys form entities for their clients and act as registered agent for their clients. These actions create the risks of “ethical landmines” that attorneys should consider in connection with their continuing role as organizer or registered agent. While the rules have not yet been issued, based on the statute and the likely rules to be adopted to effectuate the Corporate Transparency Act, it is possible that the initial beneficial ownership reporting obligation will fall on the organizer and the continuing beneficial ownership reporting obligation will be the responsibility of the registered agent. Herrick Lidstone of MSI's Colorado law member Burns, Figa & Will explores this further.
Colorado, specifically, and the United States, generally, allow free formation of entities for business and non-business purposes, with little to no obligation to disclose the underlying beneficial owners. This purportedly allows these anonymously-owned entities to be used for money-laundering and terrorist financing operations.
The William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (the “NDAA”) inclusion of the federal Corporate Transparency Act is the most recent step to require disclosure of the owners of private businesses. This new federal requirement follows international attention focused from the international Financial Action Task Force (“FATF”), almost twenty years of effort in Congress, and the geographical targeting orders (“GTOs”) issued by the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”).
