The CTA is a clear step toward modernization of the United States’ anti-money laundering legal landscape. It will give law enforcement agencies greater access to the beneficial ownership information of entities than ever before. It will also shift the burden of financial institutions from needing to collect customer due diligence information to being able to obtain it from the federal government. These changes of course come at a cost. The anonymity that private company owners have long enjoyed will be rolled back, and the new compliance costs will be shouldered by companies that are often small businesses.
My concern is that this will be used less for money laundering and more for audit selection. I can’t help but feel that this will be used to large extent as way to circumvent the defeat of the proposal from last year (earlier this year?) that banking institutions provide the IRS with account data for all accounts which had more than $600 activity. I really think that this information will be used, under the pretext of money laundering investigations, to pull bank records from pretty much anyone with a business.
I would further note that this action impacts ONLY small businesses that have filed some kind of organizational document with their Secretary of State. Businesses operating as Sole Proprietors that have not formed an LLc or Corporation don’t have to report so, if I really wanted to use my business to swap cartel money for “clean” money, I probably wouldn’t have registered with the state to begin with.