Unveiling Transparency
For anyone outside of the United States (US), you’d be familiar with the Anti-Money Laundering Directives that expanded on the financial industries and related industries’ requirements to be knowledgeable on a firm's ultimate beneficial ownership (UBO). This expansion led to the idea of an accessible register with a constantly moving target of a public register. This, however, is a topic for another article. Talks and deadlines for a UBO register began as early as 2016. While the United Kingdom (UK) was timely in its response to this directive in the European region, the US later considered the same and is alerting the public of its new legislation to come into effect with similar requirements.
Although enacted in 2021, the implementation of the US Corporate Transparency Act (CTA) is anticipated for January 2024. Having experienced the trials of similar deployments in the UK and the Caribbean, it has been interesting to observe very similar concerns and frustrations raised in the US. This legislation aims to enhance the transparency of corporate structures by mandating the disclosure of Ultimate Beneficial Ownership information. These implications will transform the landscape of corporate governance and financial integrity in the US.
Like most governments, the requirement revolves around the disclosure of UBO information, ensuring that the true individuals who benefit from a corporation's activities are identified and reported. The expectation is that complex ownership structures are identified, and the misuse of anonymous entities is prevented. CTA is also expected to curtail primarily tax evasion but also money laundering, terrorist financing, and other illicit activities. With this information, regulators and law enforcement agencies hope to more effectively combat financial crimes.
It’s essential to keep in mind that while many jurisdictions legislatively require reporting of the UBO for many types of structures, the reporting requirements vary from place to place. Further, the parameters to determine a reportable UBO also differ from country to country. Generally speaking, the average person or company will only have to pay attention to their national requirements. However, complex structures crossing many jurisdictions must take caution to understand the differences.
The implementation of the US Corporate Transparency Act is fast approaching, and responsible parties should be proactive in their readiness for reporting. Subscribe for guidance and tips on preparation. And, if you need help navigating the reporting requirements nationally or internationally, a consultant is a great resource to avoid any failings or missteps.
