NSBA files lawsuit to block law requiring UBO data for AML Compliance
A new U.S. law to prevent money-laundering through anonymous shell companies faces new headwinds. The National Small Business Administration (NSBA) earlier this month filed a lawsuit against the heads of the U.S. Treasury and FinCEN and the organizations themselves. The group seeks to prevent the new requirement that small businesses provide details of ownership used to fight money laundering.
The small-business advocacy organization claims in the lawsuit that “the shell-company bill is unconstitutional because it infringes on protected rights of state sovereignty, privacy and due process,” according to WSJ reporting.
The Corporate Transparency Act, which passed into U.S law last year, requires businesses with 20 or fewer full-time employees and less than $5 million in sales to submit the details of their ultimate beneficial ownership. Ownership disclosures remain central to conducting KYC/CDD and related due diligence and to preventing money laundering by anonymously owned shell companies.
Another key requirement of the law is that the U.S. Treasury create and maintain a private database of ultimate beneficial owners. Law enforcement and other authorized users will be able to access the database in order to investigate and prevent money laundering.
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