Treasury Secretary Yellen Announces Over 100,000 Small Businesses Register with Beneficial Ownership Database
Treasury Secretary Janet Yellen revealed that more than 100,000 small businesses have registered with the U.S. Department of the Treasury’s beneficial ownership database just one week after a major new reporting requirement was implemented. Yellen made the announcement during her visit to the Financial Crimes Enforcement Network (FinCEN) headquarters in Vienna, Virginia, stating that this move aims to close a loophole and send a clear message that the United States is not a safe haven for illicit funds.
Lower Than Expected Numbers Raise Concerns
However, initial numbers fell behind earlier projections, making it challenging to meet the prediction that around 32.6 million businesses will register this year. Additionally, FinCEN estimates that an additional five million reporting companies will join annually over the next decade.
Treasury Pleased with Filing Rate
A spokesperson from the Treasury expressed satisfaction with the current filing rate and expects numbers to grow exponentially as more businesses become aware of their reporting obligations under the new law. The agency has been actively engaging in outreach efforts and collaborating with federal and state agencies to raise awareness about the rule requirements.
The Corporate Transparency Act and its Impact
The reporting rule is part of the 2021 Corporate Transparency Act, which came into effect on January 1st. It mandates most companies, excluding specific types, to disclose their true controllers and beneficiaries. Previously, numerous companies were registered under the names of corporate agents or attorneys hired by actual owners, effectively concealing the true control of these entities. The new rules will enable law enforcement agencies to access this registry and expedite investigations into illegal activities such as tax evasion and drug trafficking.
Enhancing National Security and Law Enforcement
Treasury Secretary Yellen emphasized that increasing corporate transparency by gathering beneficial ownership information is crucial for protecting national security. The availability of this information will aid law enforcement agencies in arresting offenders, prosecuting them, and confiscating illicitly acquired assets.
FinCEN’s Actions Against Evading U.S. Sanctions
FinCEN issued the final rule on beneficial ownership information in December. Over the past year, the agency has been monitoring attempts by Russian nationals to evade U.S. sanctions. Additionally, FinCEN filed a lawsuit against Binance, the world’s largest cryptocurrency exchange, for violating the Bank Secrecy Act.
Hot Take: U.S. Small Businesses Respond Positively to New Reporting Requirement
Treasury Secretary Janet Yellen’s announcement that over 100,000 small businesses have registered with the beneficial ownership database reflects a positive response to the new reporting requirement. While initial numbers fell short of projections, the Treasury remains optimistic that filing rates will significantly increase as more businesses become aware of their obligations under the Corporate Transparency Act. By closing loopholes and enhancing corporate transparency, this initiative aims to combat money laundering and illicit activities while bolstering national security. As registration numbers continue to rise, law enforcement agencies will have access to valuable information that can expedite investigations into criminal behavior. Overall, this development marks an important step towards creating a safer and more transparent business environment in the United States.
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