New Federal Law Meant to Catch Money Launderers Could Catch Colorado Small Business Owners Off Guard

The Corporate Transparency Act requires Colorado small businesses to register with the Treasury Department’s Federal Crimes Enforcement Network, posing unexpected challenges for entrepreneurs.

A new federal law aimed at combating money laundering has caught the attention of Colorado small business owners, who are now required to register with the Treasury Department’s Federal Crimes Enforcement Network. The Corporate Transparency Act, designed to target money launderers, applies to all business entities, including LLCs, DBAs, and corporations, regardless of their size. Failure to comply with the law can result in significant penalties, prompting concerns among entrepreneurs who may be caught off guard by the new requirements.

Implications for Small Business Owners

Jacqueline Webster, an artist turned entrepreneur, recently discovered the law’s impact on her analog photography business in Golden. She stumbled upon an article online and expressed her surprise at the lack of communication from the authorities. Webster’s reaction is reflective of many small business owners who are unfamiliar with setting up shell corporations and find the registration process burdensome.

Dave Ratner, a legal expert from the Creative Law Network, highlights the potential challenges faced by independent artists and other small businesses. He emphasizes that the Department of Treasury’s limited marketing efforts have left many entrepreneurs unaware of the law’s existence. Ratner commends the opportunity to shed light on this issue, as it is crucial for small business owners to understand the implications of noncompliance.

Penalties and Compliance Deadlines

While the penalties for noncompliance are severe, businesses established before January 1st have until the end of the year to register and comply with the law. New businesses, on the other hand, have a 90-day grace period. However, any changes to the business, such as a new owner or address, must be reported within 30 days. It is important to note that the database containing this information is non-public and accessible only to law enforcement agencies.

Ratner advises small business owners not to assume that the federal law does not apply to them, as they primarily register and file with the state. Although compliance is necessary, he assures entrepreneurs that the penalties are specifically targeted at willful failure to file or fraudulent filings. Small business owners who are unaware of the law’s requirements need not fear imprisonment.

Spreading Awareness and Streamlining the Process

Webster has taken it upon herself to inform her fellow entrepreneurs about the new law. She believes that many small business owners are unaware of the filing requirements and the need to upload identification documents such as driver’s licenses or passports. However, she emphasizes that the process is relatively straightforward and free, requiring only about 20 minutes of one’s time.

Conclusion: The implementation of the Corporate Transparency Act has caught Colorado small business owners off guard, with many entrepreneurs unaware of the new registration requirements. While the penalties for noncompliance are significant, it is essential for small business owners to understand that the law primarily targets willful failure to file or fraudulent activities. Spreading awareness and providing support to entrepreneurs navigating the registration process can help mitigate any potential challenges. As small business owners adapt to this new federal law, they must remain vigilant in fulfilling their obligations while continuing to focus on their core business operations.