Lawyers Mutual Issues Risk Alert on Corporate Transparency Act
The Corporate Transparency Act, passed by Congress in 2021, is mandatory reading for lawyers who practice in the areas of real estate, corporate law and business transactions.
Lawyers Mutual issued a Risk Management Alert on the Corporate Transparency Act (CTA), as appears below.
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In 2021, Congress enacted the Corporate Transparency Act (CTA) of 2019 as part of the National Defense Authorization Act for Fiscal Year 2021. The CTA is slated to take effect early in 2022 upon the “promulgation of regulations” by the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury. The purpose of the Act is to “better enable critical national security, intelligence and law enforcement efforts to counter money-laundering, the financing of terrorism, and other illicit activities” by creating a national registry of beneficial ownership information by reporting entities.
Last fall, Margaret Shea Burnham of Nexsen Pruet, wrote an excellent article on the CTA noting its potential impact on North Carolina transactional attorneys. As her article describes, the CTA is likely to trigger reporting duties for attorneys who facilitate certain transactions, especially commercial real estate, even if the client wants to keep certain information confidential. Specifically, information about the identities of the true beneficial owners of a corporation must be reported and annually updated. Burnham’s article offers suggestions for navigating the ethical issues implicated by the CTA, including sample provisions for representation agreements, and identifies numerous unanswered questions impacting attorneys.
As the legal community waits for FinCEN reporting instructions, Lawyers Mutual NC urges insureds to become informed about the CTA impact on law practices.
Useful Links:
Federal Register :: Beneficial Ownership Information Reporting Requirements
Corporate Transparency Act: What Companies Need to Know (harvard.edu)
Breaking Down the Corporate Transparency Act (natlawreview.com)
Corporate Transparency Act: Historic New Corporation & LLC Law | LawIncWill The New Corporate Transparency Act Violate A Fiduciary Duty Of Loyalty? (forbes.com)
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