The Corporate Transparency Act (CTA), a new legislation enacted in 2021, aims to reduce money laundering and identify shell companies used for illegal transactions. Under the CTA, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has been tasked with this responsibility. In addition, businesses with less than $5 million in annual sales and fewer than 20 employees must create a registry.
Small businesses may soon face significant challenges due to the onerous reporting requirements and fines for non-compliance brought about by the CTA. This new legislation could have a major impact on these businesses, as they may not have the resources to comply or the financial means to pay any penalties that arise. It is crucial for small business owners to stay informed about these new regulations and their potential consequences.
Overall, the CTA represents a broad effort to tighten money-laundering laws. However, its implications for small businesses could be significant. Small business owners must closely monitor any changes and ensure that they are in compliance to avoid potential fines and penalties. Once again, this highlights how small businesses can be disproportionately affected by federal regulation.