The arrival of the Corporate Transparency Act (CTA) on January 1, 2022, marks a significant new chapter in the evolving relationship between corporate governance and supply chain risk management in the United States. For years, supply chain managers, compliance officers, and procurement professionals have struggled with the thorny challenge of identifying beneficial owners lurking behind layers of opaque corporate structures. The CTA aims—at least in theory—to pull back that veil. With its requirement for companies to disclose Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN), the legislation establishes a new baseline of transparency that could reshape how firms assess and onboard suppliers. There’s optimism, but it is accompanied by no small degree of caution.
It’s worth recalling that the CTA was driven as much by national security and anti-money laundering concerns as by any direct focus on supply chains. Yet its indirect implications for procurement risk are hard to overstate. By compelling firms to disclose who ultimately controls or benefits from their operations, the law offers supply-chain managers a tool long sought but rarely obtained at scale: a means of verifying whether a prospective vendor is what it appears to be on paper. Shell companies, bad actors hiding behind nominee directors, and entities linked to sanctioned parties will—at least in principle—find it harder to evade detection.
The forthcoming FinCEN BOI registry is positioned to play a pivotal role here. Although access to the registry will be controlled and designed primarily for law enforcement, financial institutions, and certain regulatory uses, there is clear anticipation that some level of controlled, query-based access will extend to corporate compliance functions engaged in supplier risk screening. For supply-chain managers, this opens a path to integrate BOI checks as a standard component of supplier onboarding—transforming what has often been an informal or fragmented process into a more systematic exercise.
But the promise of the BOI registry is only part of the story. The practical question many are already grappling with is: how does one integrate BOI screening into vendor master data flows without creating bottlenecks or exposing the firm to data privacy risks? The answer, as always, is messy. It begins with mapping existing onboarding processes to identify where ownership and control checks occur today—if they occur at all. Many procurement systems are still anchored in legacy workflows that focus primarily on price, delivery terms, and basic tax compliance. The idea of layering BOI checks into these flows can feel daunting, particularly for firms managing large numbers of small or geographically dispersed suppliers.
Yet the alternative—ignoring BOI screening or treating it as a manual, case-by-case exercise—is unlikely to remain viable for long. Regulators, customers, and investors are increasingly expecting firms to demonstrate that they know with whom they are doing business. The CTA simply makes that expectation harder to evade. For supply chain managers, this means designing onboarding workflows that embed BOI checks from the outset. One reasonable approach is to build a step into the vendor master data creation process that queries the FinCEN registry (once operational) using the legal name, registration number, and jurisdiction of the prospective supplier. The returned data—where access is granted—can then be matched against internal watchlists or third-party screening tools that flag links to sanctioned entities, politically exposed persons, or other high-risk profiles.
There is a practical matter to consider here. Integrating such checks will require technology investments. Some ERP or procurement systems may offer out-of-the-box connectors or APIs that can be configured to query BOI data in real time, but many firms will need to work with vendors or internal IT teams to build custom integrations. And because BOI data will likely carry strict access and handling requirements, firms must also update their data privacy and information security protocols to ensure compliance with FinCEN’s usage restrictions.
Beyond the technical mechanics, there’s the question of how to act on BOI findings. A mismatch between a supplier’s declared ownership and BOI registry data need not automatically trigger exclusion, but it should prompt additional due diligence. In some cases, the discrepancy may be benign—a result of delayed filings or minor administrative errors. In others, it could signal deeper governance or compliance risks that require escalation to legal or risk committees. Here, supply chain managers will need to work closely with compliance and legal teams to define thresholds and escalation paths.
Another layer of complexity arises when dealing with non-US suppliers. While the CTA’s direct disclosure requirements apply to entities registered in the U.S., its indirect effects will ripple through global supply chains. Firms that rely on overseas vendors, particularly those supplying goods into sensitive sectors or federal contracts, will increasingly feel pressure to demand equivalent ownership transparency as a condition of doing business. This could take the form of requiring suppliers to provide self-declarations of beneficial ownership, supported where possible by official documentation or certifications from local authorities.
Some supply chain professionals may feel that these expectations, while laudable in principle, are disconnected from the practical realities of global sourcing. And that’s not an unreasonable concern. In many jurisdictions, beneficial ownership transparency remains patchy or non-existent. Vendors may lack the capacity—or the inclination—to provide reliable ownership data, especially in markets where such disclosures are culturally or politically sensitive. Navigating this terrain will require both pragmatism and persistence. Firms will need to balance the desire for perfect transparency with the realities of supplier engagement, focusing their efforts where the risks are greatest.
The CTA’s real impact on supply chain risk management will take time to unfold. But it has already changed the conversation, shifting the default assumption from “we can’t know who’s behind our suppliers” to “we can and should find out.” That shift, subtle as it may seem, represents a meaningful step toward more resilient and accountable supply chains.