Overview of the Corporate Transparency Act

How Companies and their Advisors Can Prepare

Ian Buksunski, JD, and Abigail Burke, JD

Included as part of the National Defense Authorization Act (NDAA) enacted on January 1, 2021, the Anti-Money Laundering Act of 2020 (AMLA) represents the most significant amendments to the U.S. anti-money laundering (AML) regime in more than two decades. The primary goal of AML laws is to prevent nefarious actors from exploiting the financial system to further their illicit acts. Corporate structures can be a part of this problem by enabling bad actors to conceal illegal sources of funds and launder money through legitimate financial institutions. One of the most significant new additions to the AMLA, the Corporate Transparency Act (CTA) seeks to detect and prevent money laundering by requiring greater transparency in the chain of corporate ownership. In enacting the law, Congress noted that “most or all States do not require information about the beneficial owners of the corporations, limited liability companies, or other similar entities formed under the laws of the State” [NDAA section 6402(2)].