The Corporate Transparency Act, or CTA, was passed by the U.S. Congress on January 1, 2021, as part of the Anti-Money Laundering Act of 2020. The purpose of the CTA is to improve corporate transparency and prevent illicit activity and financial crimes, including fraud, money laundering, and the use of shell and front companies to obfuscate ownership and launder money.
The CTA represents a major change for businesses in the United States by requiring the disclosure of beneficial owners of U.S. companies. This move towards greater transparency is critical for the integrity of the global financial system, and it is not just about regulatory compliance. Complying with the CTA is not only important for regulatory purposes, but it also helps businesses establish trust with financial institutions, investors, and the broader market, and aligning with the CTA's regulations can help businesses avoid unintentional involvement in financial crimes that may lead to severe legal penalties and reputational damage.
The Corporate Transparency Act has a broad scope and affects many types of business entities such as corporations, limited liability companies (LLCs), and others created by filing documents with a state or Indian tribe's office. The law enhances business transparency by requiring a level of openness, which was not mandated before, from small LLCs to complex business structures with multiple layers of ownership.
Miller Canfield attorneys can provide compliance counseling and legal advice to clients impacted by the CTA.
- March 5, 2024
- February 13, 2024
