MCLE SELF-STUDY ARTICLE WHAT DO I NEED TO KNOW ABOUT THE CORPORATE TRANSPARENCY ACT?

Written by Melissa Wiley, Esq.^*

I. INTRODUCTION

When I mention the Corporate Transparency Act (CTA) to most people, I tend to garner a lot of blank stares. Acronyms rarely make for exciting cocktail party conversation, especially when they come from the mouth of a tax lawyer. But there is good reason for lawyers to understand the CTA and prepare themselves to explain the law’s requirements to their clients: under the CTA, tens of millions of entities will be required to report detailed ownership information to the Treasury Department, possibly as early as next year.

Enacted by Congress in January 2021 as part of the Anti-Money Laundering Act of 2020, the CTA aims to put an end to (or at least significantly curtail) the use of anonymous shell companies in connection with money laundering and other illegal activity. Specifically, the new law directs the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to create a database of beneficial ownership information that will allow the government to identify the individual owners of all manner of privately held assets. Where will that data come from? Perhaps, it may come from you or your clients.