Beneficial Ownership

In the 116th Congress, legislation was introduced that would require small businesses to report sensitive information to the federal government with the intent to prevent criminals from laundering money through shell corporations.

The House bill, the Corporate Transparency Act of 2019 (H.R. 2513) and the ILLICIT CASH Act (S. 2563), requires corporations and limited liability companies with 20 or fewer employees to file new reports with the Treasury Department's Financial Crimes Enforcement Network (FinCEN) regarding the personally identifiable information of businesses’ beneficial owners and update that information every year. The legislation imposes its reporting mandates only on small businesses. The bill would allow federal, state, tribal, local, and even foreign law enforcement access to business owners’ personally identifiable information, via the FinCEN database, without a subpoena or warrant.

The potential for improper disclosure or misuse of private information increases as the number of people with access to the information increases. The legislation also makes it a federal crime to fail to provide completed and updated reports, with civil penalties of up to $10,000, criminal penalties of up to three years in prison, or both. The Corporate Transparency Act of 2019 passed the House in October 2019.

This beneficial ownership information is already available to law enforcement through subpoena. A Treasury Department rule became applicable in May 2018 requiring financial institutions to obtain information on the beneficial ownership of their clients. The National Federation of Independent Business (NFIB) estimates the House bill would cost small businesses $5.7 billion over the next decade. It would waste more than 130 million hours of small-business owners’ time on compliance. 

IEC opposes proposals burdening small businesses to report beneficial ownership reporting information to the federal government. 

Beneficial Ownership Pull Quote


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