Washington, D.C. – In a bold move to enhance protections for small businesses, U.S. lawmakers have introduced new legislation aimed at clarifying reporting requirements under the Corporate Transparency Act (CTA). This initiative responds to the recent rollback of enforcement by the Trump administration, which has raised concerns about financial misconduct facilitated by anonymous shell companies.
The FinCEN-SBA Coordination on Beneficial Ownership Registration Act, led by Ranking Member Edward J. Markey (D-Mass.), alongside Senators Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-RI), aims to bolster compliance support for small business owners. In the House, Congresswoman Nydia M. Velázquez (D-NY) and Congresswoman Maxine Waters (D-CA) have introduced companion legislation, emphasizing a unified effort to hold bad actors accountable.
With financial crimes increasingly threatening the integrity of American businesses, this legislation seeks to ensure that the CTA is not only enforced but that small businesses have the resources they need to meet their reporting obligations. According to Markey, “The Trump Administration is allowing bad actors to get away with illicit activities and financial crimes, and we must make sure they do not get away with disregarding the law.”
The CTA originally passed with bipartisan support to dismantle the anonymous shell companies that facilitate money laundering, tax evasion, and other illicit activities. However, earlier this year, enforcement was suspended, prompting these lawmakers to take action. They argue that without stringent oversight, honest entrepreneurs are left vulnerable to unfair competition from those exploiting loopholes within the system.
Congresswoman Velázquez highlights the precarious position small businesses find themselves in, stating, “Turning a blind eye to anonymous shell companies leaves us vulnerable to fraud, corruption, and abuse. These shell companies don’t just enable white-collar crime—they hurt honest small businesses by rigging the system.” Her forceful advocacy aims to provide small business owners with the necessary tools and clarity to comply with the law.
The proposed legislation will require a formal cooperation agreement between the Financial Crimes Enforcement Network (FinCEN) and the Small Business Administration (SBA) within 90 days, marking a significant step toward improved educational outreach. Key features of the initiative include distributing guidance in multiple languages and using SBA field offices to conduct town halls and webinars. Such outreach is crucial, as many small business owners are still unaware of their responsibilities under the CTA.
For the overwhelming majority of small businesses, compliance will entail minimal procedures. In fact, 82 percent of small businesses are non-employer firms with only one beneficial owner, and FinCEN has estimated the average filing cost to be around $85. This is comparable to state registration fees, posing a manageable financial burden for most small businesses.
However, obstacles to compliance could still persist. During the initial rollout of the CTA, confusion around its provisions was prevalent, leaving many entrepreneurs uncertain about their obligations. This new legislation, by mandating regular updates to Congress regarding outreach and compliance efforts, aims to reduce this confusion and ensure that help is available.
Senator Warren emphasizes the stakes involved, asserting, “Small businesses deserve a system that works for them—not for scammers and cheats.” Her commitment underscores the belief that transparent business practices are a cornerstone of a fair economy.
As this bill progresses, small business owners should be aware of the implications. Compliance not only protects them from legal repercussions but also contributes to a healthier economic landscape. With the reduction of fraud and abuse, honest entrepreneurs can operate without the shadow of unfair competition from illicit actors.
For small business owners, the proposed coordination between FinCEN and the SBA represents a chance to gain critical insights into navigating legal responsibilities while reinforcing their business integrity. The initiative takes meaningful steps toward ensuring that the CTA’s original intent—to combat financial crimes and support legitimate enterprises—is realized.
As this legislation moves forward, small business owners can track its developments and access additional resources through a complete overview provided by the Senate Small Business Committee here.
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