The Corporate Transparency Act (CTA), enacted in 2021, aims to reduce money laundering and assigns the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) with identifying shell companies used for illegal transactions. The CTA also requires the creation of a registry for businesses with less than $5 million in annual sales and fewer than 20 employees. This new legislation could have a significant impact on small businesses, as they may not have the resources to comply with the new reporting requirements or the financial means to pay the fines for noncompliance.
Small businesses are often disproportionately affected by regulations, and the latest federal legislation is no different. Millions of small businesses may soon be subject to onerous reporting requirements and fines for noncompliance brought about by the CTA. It is important 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 it highlights how small businesses can be disproportionately affected by federal regulation. Small business owners need to closely monitor any changes in compliance requirements and ensure that they are taking all necessary steps to avoid potential fines and penalties. This includes staying up-to-date on any changes in reporting requirements or other compliance obligations, as well as seeking out resources and support from government agencies or professional organizations that can help them navigate these challenges.