The Compliance Divas Podcast
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The Compliance Divas Podcast
#152 Is the Law Meant to Prevent Money Laundering Already Out to Dry?
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In an earlier podcast, the Divas discussed the new Corporate Transparency Act that went into effect January 1, 2024. Recently, the constitutionality of this new federal law was challenged in an Alabama federal court. This may leave you wondering if you should comply or not, so don't miss this important update!
Cooley Law Firm: https://bit.ly/3IL6L4B
U.S. Chamber of Commerce - What Every Small Business Needs to Know About the Corporate Transparency Act: https://www.uschamber.com/co/start/strategy/small-business-corporate-transparency-act
Welcome. I'm Leslie Cannum. I'm Mary Gavoni.
SPEAKER_00I'm Linda Harvey. I'm Olivia Juan, and together we are the Compliance Divas. Welcome to the Compliance Divas podcast. My name is Olivia Juan, and I'll be your moderator today. In this episode, we're discussing: is the law meant to prevent money laundering already out to dry? Well, recently, the Corporate Transparency Act was passed, actually the first of the year, and the intent behind it was to fight money laundering by identifying all of the individuals who held a beneficial interest in a company. But now an Alabama judge barred the government from collecting company data indicating that it's congressional overreach. So this will be an interesting discussion. You know, as the compliance divas, we bring clarity and simplicity to compliance by navigating regulatory compliance to keep you on course. Please subscribe to the Compliance Divas podcast through your favorite podcast channel or on our website, thecompliancedeevas.com. Any resources that we mentioned during our podcast can be found on the Compliance Divas website. And any questions that you have, you may submit to support at thecompliancedeevas.com. And we also would appreciate you hitting a like on the podcast. So now let's get back to our podcast. So on March 1st, Judge Burke of the U.S. District Court for the Northern District of Alabama issued a decision granting a motion for summary judgment for the National Small Business Association, which had a lawsuit against the U.S. Department of Treasury, declaring that this new law, the Corporate Transparency Act, is not constitutional and enjoining the Treasury from enforcing the law. And Judge Burke concluded that the Corporate Transparency Act exceeds the Constitution's limits on the legislative branch, and that it lacks sufficient nexus to any enumerated power, including Congress's power to oversee foreign affairs and national security, regulate commerce, or impose taxes. So the Corporate Transparency Act is a rare example of a simple but effective bipartisan effort to prevent terrorist networks, drug cartels, corrupt foreign officials, illegal arms dealers, human rights abusers, sanctions, evaders, organized criminal enterprises, human trafficking, and other criminal activities from gaining access to the U.S. financial system in order to launder the money that they're making from their crimes. However, it caused quite a bit of heartburn, as you see, in requiring these businesses to report all this personal information and those who have a beneficial interest in these companies. You know, we could look at both perspectives, is what I'm getting at. We could look at the side of, you know, we want to know who these people are rather than just opening up an LLC and sending your paperwork into the state and only identifying one person of what might be many people that own a company. Now they want us to report all that information of those that have an interest in that company and the effort to prevent money laundering. So, yes, it makes sense when we look at it from that perspective. But then from the other perspective, it looks like congressional overreach. So I have some concerns, and I wanted our diva, Linda, to talk us through this about deadlines, because we had a podcast on the deadlines that discussed how you have to report. And with this recent information, Linda, can you talk to us about the deadlines and what you feel that companies should do in reporting, especially dental offices, either that have started their business practice, the business side of their practice, whether they're PLLC or corporation versus ones that are just starting up? What information can you share?
SPEAKER_01Olivia, I feel like business owners are in limbo right now and they're probably feeling very confused about what to do while this is being challenged and where they should go. But in the meantime, they really need to go ahead and comply with the requirements to file for their beneficial ownership and file that BOI, beneficial ownership information. When we spoke in our last podcast, the these businesses that were registered or created to do business before January the 1st of this year will have until January the 1st of 2025 to file their beneficial ownership information. So, in essence, there really is no reason to rush and do it right away, but I, if I was them, I would still plan and get everything lined up and prepared to report because we don't know whether this court challenge could will just take a few months or will it take more than a year. So they certainly don't want to be non-compliant. If a business was created or registered on or after January 1st of 2024 and before January 1st of 2025, they'll have 90 calendar days after receiving notice of the company's registration to file its initial beneficial ownership information. So I think it's important, Olivia, that they continue to move forward as if it's going to be a requirement, keep these deadlines in mind, have them on their calendar so they don't miss the deadline, have their CPA help them calendar them and be prepared to file if they should need to. Back to you, Olivia.
SPEAKER_00Linda, so you made a good point that I hope captures our listeners' interest is that, you know, if they're a brand new startup, that window is really short. However, if they're an existing company like we are, you know, we've all had businesses for many, many years and we have the longer deadline of a year, then they can watch some of these events unfold. But for these startups, they may not have time to see how this works out with this challenge. Leslie, let's get some thoughts from you. What happens when whether their clients ask us questions or maybe our listeners have some questions about the Corporate Transparency Act? What are you suggesting to your clients? Where should they go for information?
SPEAKER_02Well, probably the easiest place to get information would be your CPA, but there's also really the better bet would be to check with legal counsel because then you're you know you're going to be guiding it in the right direction. And that way you can ensure compliance. Now, as both of you stated, especially for new companies, because there are deadlines. Again, if the company was created January 1st of 2024 through January 1st of 2025, there's only 90 days to file. And I'm so glad, Olivia, that you were able to find a resource for us on the step-by-step how to fill out that beneficial ownership information. So our listeners will have some uh a little path and a plan of how to go forward on preparing to provide that information. And again, better safe than sorry. We don't know how long we're gonna have before the judgment finally comes to uh fruition for everybody.
SPEAKER_00That's so true, Leslie. So I hope our listeners are able to stay in close contact with their legal counsel and their CPAs because I'm sure it will definitely, they'll definitely get lots and lots of questions. And you know, and as an attorney, you know, I've noticed that, you know, when I have set up, for example, LLCs and PLCs for clients in my law practice, there's you know, documents that they're supposed to keep up with. And I always provide them for them, whether they're digital or paper copies, and inadvertently they will misplace them or they can't remember where they electronically stored them. So it's important to keep up with our corporate documents, put them in a folder, uh, maybe a password-protected folder on your system, and have them ready at hand that they're accessible so that you can look at this important information. And as the compliance divas, our goal is to keep you informed on compliance issues, even something like this. You know, this could definitely affect a dental practice, and we want to just be the provision of information that will help you in guiding your practices and making good decisions. As the compliance divas, we bring the clarity and simplicity to your practice to help you with compliance by navigating regulatory compliance to keep you on course. Please submit your questions to support at the compliancedeevas.com. And we will include the website references that we used in compiling content today. Thank you for tuning in to Is the Law Meant to Prevent Money Laundering? Already out to drive. We'll see you next week. Thanks again.