By: Ivana de la Rocha*

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Privately-held companies in the U.S. have long enjoyed a great degree of privacy concerning their internal activities, especially as it pertains to the identities of their owners. However, the Corporate Transparency Act (CTA) will change this upon its implementation. The CTA, also known as the Counter Terrorism and Illicit Finance Act, is a federal law passed by Congress that will become effective on January 1, 2024.^[1] The Act is an expansion of anti-money laundering laws and is intended to aid in the prevention of money laundering, corruption, terrorist financing, tax fraud, and concealment of illicit money through the use of shell companies in the U.S.^[2] Privately-owned companies will be required to report to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) information concerning the identity of their beneficial owners.^[3] Prior to the CTA, there were no uniform beneficial ownership information (BOI) reporting requirements in the U.S., which hampered the abilities of law enforcement to investigate entities that were being used for felonious purposes.^[4]

The scope of the CTA is intentionally broad. An entity is subject to the reporting requirement if it qualifies as a reporting company.^[5] A reporting company can be either a domestic or foreign company. A domestic reporting company is defined as a corporation, limited liability company (LLC), or any entity created by filing with a Secretary of State or equivalent official.^[6] On the other hand, foreign reporting companies are defined as any entity that is a corporation, LLC, or other entity formed under the law of a foreign country that is registered to do business in any state by filing with a Secretary of State or equivalent official.^[7] However, the CTA provides twenty-three specific exemptions to the reporting requirement. The most notable of these exemptions includes large operating companies. A large operating company is defined as any company that meets all the following requirements: employs more than twenty full-time employees; demonstrates more than $5 million in annual revenue; and has an operating presence in the U.S.^[8]

A reporting company is required to report BOI to FinCEN for each of its beneficial owners and company applicants. A beneficial owner is defined as someone who either owns or controls twenty-five percent or more of the ownership interests of the company or who directly or indirectly exercises substantial control over the company.^[9] For each beneficial owner, the reporting company must report the following BOI to FinCEN: full legal name, date of birth, residential address, and identifying number (i.e., passport number or unexpired driver’s license number) together with a copy of the document.^[10] If there are any changes in the BOI, or identities of the beneficial owners, then the reporting company must file an updated report with FinCEN within thirty days of the change.^[11] Additionally, a company applicant is anyone who directly files the documents that create the company and they must also have their information reported to FinCEN.^[12]

The information reported to FinCEN will not be made public and will not be subject to disclosure.^[13] FinCEN will be required to keep BOI secure in a restricted-access database. However, the following government agencies will have access to BOI: federal agencies engaged in national security; the Department of Treasury in connection with its official duties; and state and local law enforcement agencies in connection with investigations.^[14] In addition, financial institutions may request certain BOI to assist in anti-money laundering compliance activities with the reporting company’s consent.^[15]

The CTA will have a significant impact on businesses in the U.S. Companies will need to take the time to accurately report their beneficial owners and update the information when necessary. This will require additional resources and compliance efforts that may be costly for some businesses. In particular, small businesses are most likely to bear the brunt of the Act’s implementation. Small businesses will face additional costs in terms of filing fees and increased paperwork. They must also make sure their beneficial ownership information is accurate and up to date, which can be time consuming and difficult especially without the necessary resources or staff to comply with all the requirements. However, as the first federal law regarding disclosure of ownership of private companies, the CTA is nonetheless a significant step forward in combating money laundering, terrorist financing, and other illicit activities. While the Act may place additional burdens on businesses, the benefits of improved security and transparency likely outweigh the imposed costs.

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* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. 59,498 (Sept. 30, 2022) (to be codified at 31 C.F.R. § 1010.380).

[2] Matthew Erskine, Get Ready for the Corporate Transparency Act, Forbes (Jan. 17, 2023, 11:14 AM), https://www.forbes.com/sites/matthewerskine/2023/01/17/get-ready-for-the-corporate-transparency-act.

[3] Id.

[4] Beneficial Ownership Information Reporting Rule Fact Sheet, Fin. Crimes Enf’t Network (Sept. 29, 2022), https://www.fincen.gov/beneficial-ownership-information-reporting-rule-fact-sheet.

[5] Id. 

[6] Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. at 59,537.

[7] Id. at 59,538.

[8] Id. at 59,542.

[9] Beneficial Ownership Information Reporting Rule Fact Sheet, supra note 4.

[10] Id. 

[11] Id.

[12] Id. 

[13] Fact Sheet: Beneficial Ownership Information Access and Safeguards Notice of Proposed Rulemaking (NPRM), Fin. Crimes Enf’t Network (Dec. 15, 2022), https://www.fincen.gov/nprm-fact-sheet. 

[14] Id.

[15] Id.

By: Paul A. Abdou*

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With egg prices increasing by over 32.2 percent, there is no doubt that the American family is paying more at the grocery store than ever before.^[1] More Americans are relying on food stamps and skipping meals.^[2] While many solely attribute this increase to inflation, corporate greed is also to blame.^[3] Food companies also fault rising food prices on “inflationary pressures” like labor costs, transportation setbacks, and higher livestock feed prices.^[4] Yet, inflation has surpassed the price of wages, and the price of agricultural products has decreased.^[5]

While food prices have risen, so have corporate profits, which have hit their highest level in seventy years.^[6] Tyson Foods has more than doubled its profits since the first quarter of 2021, and General Mills has raised its prices five times since 2021, allowing for a ninety-seven percent increase in profits.^[7]

So, if food companies have nearly increased profits by one hundred percent, why have consumer prices increased to the point where families cannot afford groceries? The reasoning starts back in the 1970s. In the 1970s, changes in antitrust legislation allowed food companies to buy their competitors, creating an “oligopolistic” market where the top four companies control forty percent or more of the market.^[8] With the top four companies controlling the market, there is no competition, and the American family has no choice but to buy from them. The lack of competition and choice allows these monopolistic corporations to pass off inflation costs to the consumer while increasing food prices without consequences, known as “excuseflation.”^[9]

Government intervention is the only solution to combat these monopolistic food suppliers and monstrous prices. Congress must pass legislation to curb the corporations’ greed. The House of Representatives passed the Lower Food and Fuel Costs Act, but the Act did not pass the Senate.^[10] Enacting similar legislation that prevents the four major food corporations from implementing “excuseflation” would lower food costs. Another solution to prevent corporate greed is price control.^[11] However, it is essential to note that such price control must be temporary while Congress focuses on legislation to break up the four major food corporations. In the 1970s, President Richard Nixon’s first use of price control slowed inflation and food price increase; however, constant use of price control and freezing reverted to high inflation and elevated food prices.^[12] Therefore, price control must be temporary and limited. 

To decrease food prices, there must be government action. The consumer cannot fight against the four major food corporations alone; American families need to eat. But if the government does not intervene quickly, more and more Americans will have to choose between putting food on the table or keeping the lights on.

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* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] U.S. Dep’t of Agric., Food Prices and Spending, USDA Econ. Rsch. Serv. (Feb. 23, 2023), https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/.

[2] Whizy Kim, Prices at the Supermarket Keep Rising. So Do Corporate Profits., Vox (Mar. 17, 2023, 6:00 AM), https://www.vox.com/money/23641875/food-grocery-inflation-prices-billionaires. 

[3] Inflation has increased to a staggering 8.3 percent in 2022 compared to 2.3 percent in 2011. Id.; Monthly 12-Month Inflation Rate in the United States from February 2020 to February 2023, Statista (Mar. 16, 2023), https://www.statista.com/statistics/273418/unadjusted-monthly-inflation-rate-in-the-us/.

[4] Kim, supra note 2. 

[5] Id.

[6] Id.

[7] Tyson Foods is the largest meat producer in the United States; General Mills owns well-known brands such as Annie’s, Betty Crocker, Chex, and Bisquick. Id.

[8] Claire Kelloway, U.S. Food Prices Are Up. Are the Food Corporations to Blame for Taking Advantage?, Time (Jan. 14, 2022, 7:00 AM), https://time.com/6139127/u-s-food-prices-monopoly/. 

[9] Id.; see also Tracy Alloway & Joe Weisenthal, How ‘Excuseflation’ Is Keeping Prices – and Corporate Profits – High, Bloomberg (Mar. 9, 2023, 5:30 AM), https://www.bloomberg.com/news/articles/2023-03-09/how-excuseflation-is-keeping-prices-and-corporate-profits-high.

[10] Brian Zahn, DeLauro: Food Cost Crisis Requires Ending Corporate Greed, Increasing Resources, New Haven Register(Jan. 19, 2023), https://www.nhregister.com/news/article/DeLauro-Food-cost-crisis-requires-congress-action-17728618.php.

[11] Charles Riley, Should the Government Control the Price of Food and Gas?, CNN Bus. (Jan. 18, 2022, 7:01 AM), https://www.cnn.com/2022/01/18/economy/price-controls-inflation/index.html. 

[12] Id. 

By Zisheng Xing*

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Ever since the Bretton Woods Agreement established the international monetary system after World War II, the U.S. dollar has been the world’s primary reserve and transactional currency for international trade.^[1] International Monetary Fund statistics show that U.S. dollars account for sixty percent of the world’s foreign exchange reserves today.^[2] Nearly fifty percent of the world’s international loans and global debt securities are denominated in dollars, and in foreign exchange markets, dollars are involved in almost ninety percent of all currency trading.^[3] This dominant position grants the United States financial power in the global market and improves the effectiveness of U.S. economic sanctions against those who violate human rights, as well as those who disrupt world peace.^[4]

However, the winds of change are felt through the air, as China and France conducted the first liquefied natural gas trade using the e-CNY, China’s digital fiat, on March 29, 2023.^[5] This marks a significant first step for the rise of the Chinese yuan as a global transactional and reserve currency and raises concerns that these winds may evolve into a raging storm that will topple dollar supremacy in global finance.^[6] But will these winds evolve into the furious tempest that scholars fear? Or will they die down into a meek spring breeze? Likely neither.

For the foreseeable future, the yuan is unlikely to seriously threaten the supremacy of the dollar simply because, historically, the global market’s acceptance of a dominant international currency has been very slow. It had taken the United States several decades after it had surpassed the British Empire as the world’s biggest economy to replace the pound sterling with the dollar as the dominant reserve currency, and currently China’s gross domestic product is only two-thirds of that of the United States.^[7] 

In addition, the success of the United States in the global financial market is the result of a combination of foreign policy, historical developments and a liberal market system that China is either unwilling to or yet unable to replicate. The current dollar dominance is sustained on several key factors: (1) the stability of U.S. monetary and financial policies, (2) the relative lack of U.S. barriers to cross-border capital flows, (3) the depth and liquidity of globally accessible markets for U.S. treasuries and other U.S. financial instruments, and (4) the reliance of global financial market participants on the U.S. rule of law.^[8] By contrast, the lack of transparency and predictability on the role of the government in the market and the Chinese government’s own caution against liberalizing the country’s capital accounts have caused investors to be hesitant to settle transactions in yuan.^[9] In a nutshell, the yuan will not be able to topple the U.S. dollar without significant reforms in market freedom and governmental transparency in China.

That being said, the yuan may indeed evolve into a local powerhouse firmly rooted in a regional economy of developing and sanctioned countries. A yuan-based regional economy may allow China to step in as a substitute source of financing to sanctioned countries such as Iran and Russia and facilitate transactions between these countries through the Cross-Border Interbank Payment System (“CIPS”), the People’s Bank of China’s (“PBoC”) own cross-border settlement system.^[10] Recently, the yuan had already replaced the dollar as the most traded currency in Russia since the beginning of the Russo-Ukraine War in 2022.^[11]

Countries that extensively engage with China in business may also contemplate a switch to the yuan as a transactional currency. Since the beginning of the “Belt and Road” Initiative (“BRI”) in 2013, it is estimated that China has invested a total of $932 billion on developmental projects across the world, mostly in developing countries, a figure projected to rise to $1.2-1.3 trillion by 2027.^[12] Countries heavily involved in trading with China are incentivized to transact directly in yuan, saving the step of converting to the dollar. Pakistan had already begun replacing the dollar with the yuan for transactions with China, and recently, Brazil and China had signed a deal allowing the two countries to exchange goods using the yuan.^[13]  

Recent developments show a trend towards the gradual de-dollarization of the world and a slow move away from a post-World War II U.S. financial dominance to a more diversified world economy. While there are concerns about the increasing impact of authoritarianism in the wake of China’s rise in financial influence, such developments also provide the opportunity for self-sufficient regional economies more responsive to local financial needs.

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* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] Kimberly Amadeo, Bretton Woods System and 1944 Agreement, The Balance (May 26, 2022), https://www.thebalancemoney.com/bretton-woods-system-and-1944-agreement-3306133.

[2] Rebecca M. Nelson & Martin A. Weiss, Cong. Rsch. Serv., IF11707, The U.S. Dollar as the World’s Dominant Reserve Currency (2022).

[3] Id.

[4] See, e.g., Infographic – Impact of Sanctions on the Russian Economy, European Council (Mar. 17, 2023), https://www.consilium.europa.eu/en/infographics/impact-sanctions-russian-economy/ (Since a new round of sanctions were imposed on Russia after the Russo-Ukraine War began in 2022, it is estimated that Russia’s gross domestic product (GDP) dropped by 2.2% to 3.9% and is expected to decline by 3.3% to 5.6% in 2023. Russia’s inflation in 2022 reached almost 14%).

[5] Nicholas Say, China & France Complete First LNG Gas Trade Using Chinese CBDC, Blockonomi (Mar. 31, 2023), https://blockonomi.com/china-france-complete-first-lng-gas-trade-using-chinese-cbdc/.

[6] Sergio Goschenko, China Makes Advances in Ditching the US Dollar for Settlements — Inks Deal with Brazil and Completes First Yuan LNG Purchase, Bitcoin.com (Mar. 31, 2023), https://news.bitcoin.com/china-makes-advances-in-ditching-the-us-dollar-for-settlements-inks-deal-with-brazil-and-completes-first-yuan-lng-purchase/; Andrew Ackerman, U.S. Lawmakers Look to Digital Dollar to Compete with China, Wall St. J. (Aug. 8, 2022, 7:00 AM), https://www.wsj.com/articles/u-s-lawmakers-look-to-digital-dollar-to-compete-with-china-11659925037.

[7] See Cong. Rsch. Serv., supra note 2; Jianguo Xu, Developments and Implications of Central Bank Digital Currency: The Case of China e-CNY, 17 Asian Econ. Pol’y Rev. 235, 248 (2022).

[8] Darrell Duffie et al., Digital Currencies: The US, China, and the World at a Crossroads, 5 (Darrel Duffie & Elizabeth Economy eds., Hoover Inst. Press 2022).

[9] Cong. Rsch. Serv., supra note 2. 

[10] See Emily Jin, Why China’s CIPS Matters (and Not for the Reasons You Think), Lawfare: China (April 5, 2022, 8:01 AM), https://www.lawfareblog.com/why-chinas-cips-matters-and-not-reasons-you-think.

[11] China’s Yuan Replaces Dollar as Most Traded Currency in Russia, Bloomberg (Apr. 3, 2023, 5:50 AM), https://www.bloomberg.com/news/articles/2023-04-03/china-s-yuan-replaces-dollar-as-most-traded-currency-in-russia.

[12] Nedopil Christopher, China Belt and Road Initiative (BRI) Investment Report H1 2022, Green Finance & Development Center, FISF Fudan University 5 (2022); Inside China’s Plan to Create a Modern Silk Road, Morgan Stanley (Mar. 14. 2018), https://www.morganstanley.com/ideas/china-belt-and-road.

[13] Muhammad Tayyab Safdar & Joshua Zabin, Pakistan and the Belt and Road: New Horizons for a Globalized RMB, The Diplomat (Sept. 4, 2020), https://thediplomat.com/2020/09/pakistan-and-the-belt-and-road-new-horizons-for-a-globalized-rmb; Goschenko, supra note 6.