Reveal Yourself: The Corporate Transparency Act

Corporate law across jurisdictions in the United States generally provides small business owners with various forms of confidentiality, including anonymity of ownership and control. While these legal regimes are beneficial for limiting liability, operational flexibility, and asset protection, bad actors have often abused these protections to conceal their identities while perpetrating financial crimes. To counteract this, as part of the Corporate Transparency Act, the U.S. Treasury Department is now requiring all qualifying small businesses – including the legitimate ones – to disclose and report information regarding their (a) “company applicant” and (b) “beneficial ownership.” These reporting obligations go into effect starting January 1, 2024. For even legitimate businesses, any failure to report could result in stiff penalties for the noncompliant businesses themselves, as well as for their owners and controlling officers.