Volume 101

Kimberly R. Kemppainen

The Corporate Transparency Act (CTA) was designed to be one of the most consequential federal transparency reforms in decades. It was enacted to curtail the use of anonymous business entities in money laundering, fraud, and tax abuse and promised to transform beneficial ownership disclosure from a reactive investigative tool into a universal reporting regime. Yet the CTA’s implementation has proven far more complicated and unstable than its legislative ambitions suggested. The statute’s practical significance has been nearly eradicated by enforcement delays, shifting compliance expectations, and sustained constitutional challenges. However, the erosion of the CTA’s regulatory force does not diminish the underlying problem that motivated its enactment. This Note primarily focuses on the CTA’s original reporting framework, which defined the statute’s compliance obligations and cost structure.

This Note evaluates the original CTA through a cost-benefit analysis to explain both its economic implications and institutional instability. This framework is particularly useful in the context of disclosure-based regulation, where policymakers seek to reduce information asymmetries while inevitably imposing compliance burdens. The analysis goes beyond measuring regulatory costs and identifies the conditions under which transparency mandates become inefficient or ineffective. By examining the statute’s original reporting framework, this Note provides both an explanation of the CTA’s trajectory and insight into the design challenges facing future beneficial ownership disclosure regimes.

Despite the CTA’s downsizing, it remains instructive. Its bipartisan origins and continuing constitutional litigation indicate that beneficial ownership transparency will likely remain a recurring feature of regulatory policy. Understanding the economic and institutional dynamics that constrained the CTA is essential for evaluating future disclosure frameworks. Effective reporting regimes require not only legitimate policy objectives but also careful calibration of their expected benefits and costs. In this respect, the CTA serves not only as a regulatory experiment but as a case study in the economic limits of disclosure-based financial regulation.

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