New global study by CSC uncovers widespread uncertainty around reporting requirements
The CTA took effect on January 1, 2024, with the objective of giving law enforcement and other government agencies more tools to protect national security and fight corruption, terrorism, and money laundering.
The study by CSC, the world’s leading provider of global business administration and compliance solutions, was commissioned among 200 senior professionals including general counsels and corporate secretaries across a broad range of industries in the U.S., Continental Europe, the U.K., and APAC, to gauge their views on the introduction of the Act. Respondents were from U.S.-based corporations and non-U.S. based multinational corporations with entities registered in the United States.
The findings, detailed in a new report, “The Corporate Transparency Act: Readiness, Concerns, and Implications,” shed new light on their primary concerns, key compliance challenges, and the longer-term implications of the law’s introduction.
“While CTA regulation has been in effect since the start of this year, organizations are still grappling with what it means for them,” says Julie Dallmann, product management director at CSC. “The legal complexities involved are unchartered territory for many, with the different moving parts both challenging to interpret and balance.”
The research found that while nearly all (93%) respondents said they’re aware of the CTA, widespread uncertainty around its intricacies remains. Less than half (45%) of respondents surveyed are aware of the CTA’s reporting requirements at this stage, and only 39% are aware of the reporting deadlines. Just a third are familiar with the CTA’s exemptions.
CSC’s study identified the lack of guidance around what non-U.S. entities need to do as a major concern among respondents, with nearly two-thirds (62%) citing this as a challenge ahead of high fees and costs, and a lack of understanding around the penalties for CTA non-compliance (both of which were identified by nearly 40% of respondents).
“The extent to which businesses are still feeling unfamiliar or uncomfortable about their organization’s ability to comply with the CTA is worrying but unsurprising,” says Julie. “It’s clear the subjectiveness of the CTA, including ambiguity around exemptions and the question of who within an organization meets the definition of being a beneficial owner, is causing uncertainty as to its provisions.
“With much of the onus on the organization to ensure compliance, these complexities are driving more businesses to partner with third-party service providers who are able to ensure compliance with the CTA, allowing them to focus on their strategic business priorities.”
