What are the perceived longer-term implications of the introduction of the Corporate Transparency Act, and what are the immediate concerns of U.S. businesses?
The Corporate Transparency Act (CTA) represents a significant development in U.S. financial regulation. Its objective is to give law enforcement and other government agencies more tools to protect national security and fight corruption, terrorism, and money laundering. Specifically, the CTA requires disclosure of Beneficial Ownership Information (BOI) for corporations, limited liability companies, and similar entities that do not fall under one of the 23 enumerated exemptions. Reporting companies created before January 1, 2024, must file their initial BOI report by January 1, 2025.
Below, we provide headline insights drawn from CSC’s recent research into sentiment around the introduction of the CTA, which follows our previous blog, How Concerned are U.S. Businesses About the Introduction of the Corporate Transparency Act? The results were encouraging, with the vast majority (84%) expecting the CTA to be a positive development for business relationships and trade, although the research also unearthed some clear concerns.
The full results of this research can be found in CSC’s exclusive new report, “The Corporate Transparency Act: Readiness, Concerns, and Implications.”
What are the main concerns regarding CTA compliance?
When asked to identify concerns regarding their firm’s CTA compliance, nearly half of respondents (48%) in our survey expressed uncertainty around whether or not their organization’s entities will be exempt from the CTA. Nearly 40% of respondents selected both high fees and costs around CTA compliance, and a lack of understanding around the penalties for CTA non-compliance.
Businesses are expecting the CTA to be positive for business relationships and trade
Our study found a significant majority of respondents (84%) think the CTA will result in higher levels of trust and will support stronger business relationships and trade.
A majority of businesses are not expecting the harmonization of CTA and Ultimate Beneficial Owner (UBO) regulations
Many of our 200 respondents have a global perspective—nearly two-fifths of them work for non-U.S.-based multinational corporations with entities registered in the United States. This perspective perhaps helped inform the fact that nearly 60% of all those we surveyed are not expecting CTA regulations in the U.S. and UBO legislation in Europe to harmonize into one global standard over the next decade.
We believe this skepticism to be justified, with governing authorities often not appearing to be particularly concerned about establishing uniform standards. In the U.S. alone there is considerable nuance from state to state—for example, around annual report and business license filing requirements—and these regulatory differences are replicated globally. Each jurisdiction is unique, and worldwide, they all vary in terms of how they set up regulations and the requirements for entities to operate.
Indeed, as further nuances are introduced, standards could get even more fragmented, even just within the United States. It’s this complexity that’s driving organizations to work with service providers such as CSC who are able to bring multi-jurisdictional expertise to the table.
Against this backdrop, how can CSC help?
CSC provides an end-to-end CTA Filing service—our experts prepare and submit BOI filings to FinCEN on your behalf. Our full-service framework and industry-leading team of experts reduce the burden of CTA compliance, allowing you to focus on strategic business priorities in what is a complex area.
To learn more, download the full report, “The Corporate Transparency Act: Readiness, Concerns, and Implications,” here.
