Submitted by UCS on December 14, 2023

What is the Corporate Transparency Act?

It is normal to feel overwhelmed, frustrated, and possibly even worried about how to comply with any new regulation, especially if the rules are constantly evolving and being defined, redefined, explained, and reevaluated. So, let’s take a step back before diving into the minutia.

What is the Corporate Transparency Act (“CTA”)?

At a very fundamental level, the Corporate Transparency Act (“CTA”) was designed to be an easy-to-comply law with minimal effort required. The new regulation, enforced by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”), requires every “reporting company”^[2] to fill out one form that will be located in a governmentally secure filing website created by FinCEN.^[3]

The CTA was designed to fill gaps in the fight against money laundering, illicit shell companies, and bad actors utilizing the private nature of forming companies to abuse the system. The aforementioned gaps are caused because there is no authority in the U.S. that requires “Beneficial Owners”^[4] to disclose their identity to anyone when registering a company with the Secretary of State. Back in 2006, the Financial Action Task Force (“FATF”)^[5] criticized the U.S. system for this exact reason. FATF did so again in 2016, which sparked the current movement to pass the CTA in 2017, eventually leading to the date of January 1st, 2024, beginning the effect of this new law.

All this being said, the goal of the CTA is to build a database for the federal government so that in the case of an investigation, they have a pathway to look for real human accountability—not just a corporation that has no apparent connection to people with names and addresses. That’s it—connecting a person with their corporation. Of course, with a law comes rules, regulations, and who could forget exemptions, but we at UCS will continue to provide information on those topics in the coming weeks so this transition on January 1st will be as smooth as possible.

To keep pace with the upcoming rollout of the Corporate Transparency Act, visit our CTA Reference Page and sign up for the UCS Newsletter today.

About the authors

Ray Barr is an independent writer and video editor who is presently pursuing a Master of Fine Arts in Creative Writing at The New School. He completed his undergraduate studies in Classical Civilizations at The University of Richmond, where he also explored various disciplines such as History, Anthropology, Environmental Science, and Economics within the framework of a liberal arts education. Ray’s work has been featured in The Messenger literary magazine, and he was honored with The Margaret Owen Finck Award for Creative Writing for his outstanding piece titled “What’s Cooking”.

Keith Sheppard, a Business Development Manager at United Corporate Services, holds a Bachelor of Science degree in Paralegal Studies from St. John’s University. With an extensive career spanning over 27 years in the legal services industry, Keith has held various managerial roles, including Client Service Representative and Corporate Paralegal Manager. His wealth of experience enables him to offer valuable perspectives on effectively navigating the intricacies of corporate filing and uniform commercial code transactions.

Disclaimer: The content and materials which have been prepared by United Corporate Services, Inc. regarding the Corporate Transparency Act are for informational purposes only, and are not intended to provide, and should not be relied upon for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any future corporate formation transactions.  Content regarding the Corporate Transparency Act has been taken directly from FinCEN.  Additional information regarding the Corporate Transparency Act is available through the FinCEN website by clicking here or you can contact FinCEN directly with additional questions here.

^[2] Link to defined terms or maybe a page on reporting companies

^[3] The layout of this filing and website are currently not disclosed by FinCEN

^[4] Link to defined terms

^[5] Link to defined terms