The Corporate Transparency Act: Steps in the United States Towards Fighting Corruption

May 21, 2021
STARnet

On January 1st, 2021, the United States Congress passed the National Defense Authorization Act for Fiscal Year 2021. This Act contained one very important provision: the Corporate Transparency Act, known as the CTA. Even if you have not yet heard of it, the CTA is one of the first major steps the United States has taken towards fighting corporate corruption.

Corruption is a major threat to businesses, governments, and citizens in every nation across the globe. The United States should be concerned about it, too. The 2020 results of Transparency International’s annual Corruptions Perception Index ranked the United States in the worst position it ever has, as the 25th most corrupt country out of the 180 polled. At STARNet, we are dedicated to fighting corruption, and we see the Corporate Transparency Act as a step forward.

The CTA states that all United States businesses must file information about their owners to the Financial Crimes Enforcement Network, commonly known as FinCEN. The primary purpose of this is to combat shell companies. Shell companies are companies that lack employees or physical spaces but have bank accounts that can receive profits as an owner of other legitimate businesses. They are commonly used for tax evasion or money laundering.

Businesses are now required to file the personal information of anyone who owns or runs more than 25% of their company. This information includes the owner’s name, birthday, address, and Social Security number. Rather than annually, this information must now be filed whenever a new company is formed or within a year for existing companies. It must only be updated when the information changes, of either the existing owner or a new owner.

There are some companies exempt from filing under the CTA. Larger companies which are publicly traded are exempt, since the ownership information is already public knowledge. Companies in highly regulated industries, such as financial institutions, are exempt since they are already filing under pre-existing regulations. Finally, charities, churches, and nonprofits are not required to file their ownership information.

For those who are wary of providing their personal information to the government, the CTA regulates that FinCEN keeps all of the data safe in a private database. It can only be accessed by request from another federal agency. Companies who violate the CTA by refusing to file could face criminal charges, up to two years in jail.

The effect that the Corporate Transparency Act has on individual companies may be minimal, but it marks a major step forward from the United States government in fighting corruption. If you have had any issues with corruption, contact the Stolen Asset Recovery Network today. We provide swift action on a global scale to combat cyber crimes and corruption!

The following two tabs change content below.

STARnet

STARNet, which is short for Stolen Asset Recovery Network, is a global alliance of independent law firms created to provide financial institutions and governments with multi-disciplinary services across countries and jurisdictions for locating, freezing, and ultimately recovering stolen assets related to cyber heists, fraud or corruption.

Latest posts by STARnet (see all)