Beneficial Ownership Regulatory Relief Is Far From Assured

Financial Services Partner Gabriel Caballero discussed the effectiveness of the Corporate Transparency Act (CTA) in helping to relieve banks' anti-money-laundering (AML) compliance burdens, as was originally intended, with the American Banker. Signed into law in 2021, the CTA requires businesses to report their beneficial ownership information directly to a registry database maintained by the Financial Crimes Enforcement Network (FinCEN), and the reform was intended to crack down on the use of anonymous shell companies in the United States.

However, as FinCEN's rulemaking process to implement the CTA unfolds in the coming months and years, legal analysts and banking advocates say it's unclear whether the industry will see relief. 

“We’ve been talking about this issue through legislative reform for well over a decade,” said Mr. Caballero. “We got the [2016 customer due diligence rule], which was this big, crowning achievement. It’s really not clear that it’s made life any easier for law enforcement, but it’s definitely imposing a massive burden on the financial services industry."

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