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01.02.24   |   Insights

FRAUD ALERT – Scammers Taking Advantage of New “Corporate Transparency Act” to Steal Sensitive Information

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The Corporate Transparency Act (“CTA”) is a new law that requires most small businesses operating in the United States to register with the Financial Crimes Enforcement Network (“FinCEN”) starting January 1, 2024. You can find out more about this law and its requirements in our recent blog post.

Prior to its effective date, a survey by Wolters Kluwer showed that 74% of affected businesses were unaware of the law’s existence, and 41% of those who were aware of it were uncertain whether the law applied to them. Scammers are taking advantage of this uncertainty by sending out fake compliance letters claiming to be collecting information for the new law. On its new Beneficial Ownership Information webpage, FinCEN has posted the following warning:

Alert: FinCEN has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act. The fraudulent correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages or click on any links or scan any QR codes within them.

If you have received correspondence claiming to be collecting information for the Corporate Transparency Act, DO NOT RESPOND TO IT. As stated in the alert, FinCEN does not send out unsolicited requests for information, and you should not provide personal information to the requestor or follow any links provided.

Even before the CTA, scammers have long sent out letters and emails to small businesses claiming to be collecting information for various registrations, licenses, or even taxes. They often contain language implying that the request is urgent and may claim you owe dubious “penalties” or “service fees.”

As technology advances, scammers have gotten more and more sophisticated, and fraudulent requests can often be nearly indistinguishable from the real thing. If you have any questions about the validity of any supposedly official communications regarding the CTA or any other legal requirements affecting your business, please reach out to us before responding. Our attorneys have experience with a variety of local, state, and federal regulatory requirements affecting all sizes of businesses, and can help you determine whether a request you have received is legitimate or a scam.

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