Business owners should not forget anti-money laundering rule currently in legal limbo

abcnews.go.com:

Small business owners should not forget about a rule that requires them to register with an agency called the Financial Crimes Enforcement Network, or FinCEN, by Jan. 1

Small business owners should not forget about a rule — currently in legal limbo — that would require them to register with an agency called the Financial Crimes Enforcement Network, or FinCEN, by Jan. 1.

The registration is part of the Corporate Transparency Act, an anti-money laundering statue passed in 2021. Under the CTA, the owners and part-owners of an estimated 32.6 million small businesses must register personal information with FinCEN, such as a photo ID and home address.

Registering isn't difficult, but if a small business owner is unaware of the requirement, they could be slapped with penalties of up to $10,000. Businesses with more than 20 employees and more than $5 million in sales can qualify for exemptions.

For now, the rule is on hold. On Dec. 3 a federal court in Texas issued a preliminary injunction prohibiting enforcement of the rule. FinCen has said registering is voluntary. But the injunction could be overturned on appeal, so small business owners should keep an eye on the case.

The act was intended to get a look inside shell companies and crack down on attempts by “criminals, organized crime rings, and other illicit actors to hide their identities and launder their money through the financial system,” Treasury Secretary Janet Yellen said in 2022.

Originally, the rules became effective in 2024 and gave existing businesses until Jan. 1, 2025, to register. However, businesses that started in 2024 were given 90 days to register.

Doris Dike, a principal at Dike Law Group in Frisco, Texas, that works with small business healthcare