How the Corporate Transparency Act Can Launch Your Compliance Business
Learn how the new legislation creates a demand for compliance and advisory services and how you can position yourself as a trusted partner for your clients.
What is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) is a new federal law that was enacted in January 2021 as part of the National Defense Authorization Act. The CTA aims to prevent money laundering, tax evasion, terrorism financing, and other illicit activities by requiring certain businesses to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
A beneficial owner is a natural person who owns or controls 25% or more of the equity interests of a business entity, or who exercises substantial control over the entity’s management or operations. The CTA applies to corporations, limited liability companies, and similar entities that are formed or registered in the U.S., or that operate in the U.S. with a foreign registration. The CTA exempts certain entities that are already subject to federal or state regulation, such as banks, insurance companies, public companies, and nonprofits.
The CTA requires covered entities to submit a report to FinCEN that includes the following information for each beneficial owner:
- Name
- Date of birth
- Current address
- Unique identifying number from a passport, driver’s license, or other identification document
The report must be filed at the time of formation or registration of the entity, and updated within one year of any change in the beneficial ownership information. The CTA also imposes civil and criminal penalties for noncompliance or false reporting.
How does the CTA affect your accounting clients?
The CTA creates new compliance obligations and challenges for your accounting clients who are subject to the reporting requirements. They will need to identify their beneficial owners, collect and verify their information, file and update their reports, and maintain records for five years. They will also need to be aware of the potential risks and liabilities associated with noncompliance or false reporting.
However, the CTA also creates an opportunity for your accounting firm to offer value-added services to your clients and help them navigate the new legislation. You can position yourself as a trusted partner who can assist your clients with the following:
- Understanding the CTA and its applicability to their business entities
- Conducting a beneficial ownership analysis and establishing a reporting process
- Preparing and filing the reports to FinCEN and updating them as needed
- Implementing internal controls and policies to ensure compliance and accuracy
- Providing guidance and advice on best practices and risk mitigation strategies
How can you market your Compliance services?
The CTA is a great way to launch your compliance services. To market your compliance services, you need to communicate the value proposition and the benefits that you can deliver to your clients. You can use various channels and strategies to reach out to your existing and potential clients, such as:
- Creating and distributing informative content, such as blog posts, newsletters, webinars, podcasts, or white papers, that explain the CTA, HIPAA, FTC Safeguards, or other compliance standards and its implications for your clients
- Hosting or participating in events, such as seminars, workshops, or roundtables, that provide an opportunity to educate your clients and showcase your expertise
- Launching or updating your website, social media, or email campaigns, that highlight your compliance services and testimonials from satisfied clients
- Reaching out to your clients individually, either by phone, email, or in-person, and offering a free consultation or assessment of their compliance needs
- Partnering with other professionals, such as lawyers, doctors, bankers, or consultants, who can refer you to their clients who need compliance related services
The CTA is a significant change in the U.S. business landscape that affects many of your accounting clients. By offering compliance services, you can help your clients comply with the new laws and avoid penalties, while also generating new revenue streams and enhancing your reputation as a trusted advisor. To succeed in this niche, you need to stay updated on the compliance regulations and guidance, develop your skills and capabilities, and market your services effectively.
