A tale of two nations: The Corporate Transparency Act and the cultural divide between the United States and Canada

In addition to the words of de Tocqueville and Berton, the adoption and implementation of corporate transparency laws in the United States and Canada also offer a revealing lens through which to observe the cultural and institutional differences between the two countries, particularly regarding their respective tendencies to fight for individual rights against governmental actions, or submission thereto.

In the United States, the enactment of the Corporate Transparency Act (CTA) in 2021 has been met not only with political scrutiny but also with judicial challenges that underscore a deeply embedded combative spirit in American civic life. Intended to improve corporate transparency by requiring certain legal entities to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), the law was heralded by proponents as a vital step toward combating money laundering and illicit finance. Yet its implementation has been anything but smooth.

Multiple lawsuits have challenged the constitutionality of the CTA, with plaintiffs arguing the federal government has overreached its powers and infringed upon individual privacy and state sovereignty. In one prominent case, a federal judge in Texas issued a nationwide injunction, halting the enforcement of the CTA. The US Supreme Court later lifted the injunction while legal proceedings have continued, igniting further debate and setting the stage for escalation to higher courts. These developments reflect a broader American tradition of distrust toward centralised authority and a willingness, indeed a proclivity to litigate, resist, and assert individual or institutional autonomy in the face of governmental overreach.

In contrast, Canada’s path to corporate transparency reform has been characterised by a markedly different tone. Over the past few years, federal and provincial governments in Canada have introduced legislation requiring corporations to collect and, in some cases, publicly disclose beneficial ownership information. While these measures share similar objectives with the CTA in the US, namely, to curb financial crime and enhance accountability, they have not provoked significant public controversy or legal opposition despite being equally, if not more, as intrusive of private life.

Canada’s implementation of its own corporate transparency legislation, at both federal and provincial levels, has not generated constitutional challenges or widespread political mobilisation, suggesting a general societal comfort with regulatory intervention in private life when it is framed as serving the public good. Rather than triggering confrontation, these measures have been absorbed into the policy landscape with no friction at all.

This divergence illustrates the deep cultural distinction between the two countries when it comes to the protection of individual rights. The United States has long cultivated a political and legal culture that valorises the protection of these rights, and the contestation of state power. Americans are more inclined to see governance as a battleground where opposing interests must be vigorously defended, often through courts or public protest. Canada, by contrast, was literally founded on loyalty to the Crown, and submission to and trust in the state and institutions remain a national trait. Canadians are, in general, less inclined to challenge laws through legal action. 

The differing reactions to corporate transparency reform illustrate more than just variations in legal frameworks; they speak to foundational cultural and national orientations. The American response to the CTA reveals a combative ethos that sees legislation as a potential threat to liberty that requires constant vigilance and resistance. The Canadian response to the introduction of corporate transparency legislation, or rather the lack thereof, reflects a quiet surrender to the lawful power of the Crown to make laws for the peace, order, and good government of Canada. 

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Jean Sébastien Lebrun is a partner at Spiegel Ryan and his areas of expertise cover corporate and tax planning as well as mergers and acquisitions (M&A).