Corporate Transparency Act opening door to new kinds of scams

The Corporate Transparency Act, developed to counter financial crimes like money laundering, could ironically be opening the door to new scams targeting the same small-business owners who must comply with the act.

An analysis from Thomson Reuters noted that the CTA requires that most small-business owners provide their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), essentially identifying the true owners of an organization. Failure to comply with the filing standards can result in possible fines and imprisonment. However, many such small-business owners have never heard of the CTA, and aren’t 100% sure how to comply with it even when they do know about it.

This confusion has led to new opportunities for scammers to target these business owners. The requirement to provide information to the federal government under penalty of major fines and, potentially, imprisonment provides a strong opportunity to collect valuable data that can be used in a variety of further crimes such as identity theft.

According to Thomson Reuters, the most pervasive scams in this area include:

• Filing company scams: False companies can position themselves as intermediaries to file the form at a cost to the business owner. These fake intermediary companies not only get the initial fee but can sell personally identifying information on the black market. Often, they also fail to follow up on any obligations after the initial filing.
• False websites. Illicit actors set up websites that impersonate FinCEN, often copying even the stamps and logo. This gives the scammers access to businesses’ information. These sites also gain access to businesses’ information and never fulfill the obligation of the business to file.
• Threatening letters and emails. Letters or emails are sent out claiming to be from FinCEN or a fake government agency associated with FinCEN. These communications are often very threatening, and some of the more sophisticated letters use QR codes that are a misdirection and can result in information being shared.
• Phone scams. Phone calls offering business help to file over the phone. The calls range from friendly reminders to threats of enforcement and, if successful, usually end with individuals’ information on the black market.

“Small businesses now must be more discerning about the notices they receive as little can be done to intercept the scams,” said the Thomson Reuters report.