The Corporate Transparency Act (CTA), enacted in 2021, is a federal legislation aimed at reducing money laundering. The Financial Crimes Enforcement Network (FinCEN), a department within the Treasury Department, has been assigned the responsibility of identifying shell companies used for illegal transactions. Under the CTA, businesses with less than $5 million in annual sales and fewer than 20 employees must create a registry.
Small businesses may be significantly impacted by the onerous reporting requirements and fines for noncompliance brought about by this new legislation. Millions of small businesses could be affected, as they may not have the resources to comply with the new reporting requirements or the financial means to pay the fines for noncompliance. It is crucial for small business owners to stay informed about these new regulations and their potential impact on their operations.
The CTA is a broad effort to tighten money-laundering laws, but its implications for small businesses could be significant. As the law is implemented, small business owners will need to closely monitor any changes and ensure that they are in compliance to avoid potential fines and penalties. The CTA is another example of how small businesses can be disproportionately affected by federal regulation.