People looking for anonymity in their business dealings might be shocked to find they no longer can use limited liability companies (LLCs) to hide their ownership interests under the Corporate Transparency Act, a federal law aimed at curtailing money laundering that went into effect on January 1.
The feds aren't the only ones going after shell companies. In December, New York Governor Kathy Hochul signed into law the New York LLC Transparency Act, a similar measure that requires beneficial owners of LLCs to file personal information with the New York Department of State. California's legislature has its own version of the law in the works.
Compliance is going to be tricky. The Corporate Transparency Act (CTA) will apply to 32.6 million private companies, many of them small businesses and startups, as well as foreign entities with primary locations in the United States. A significant number haven't even heard of this reporting requirement. And with fines of up to $10,000 and possible jail time on the line, noncompliance poses a not-insubstantial risk.
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Maria Dinzeo
Maria Dinzeo is a San Francisco-based journalist covering the intersection of technology and the law, with a focus on AI, privacy and cybersecurity.
