Small business owners across the U.S. will soon be subject to a 2020 law known as the Corporate Transparency Act that requires corporations and limited liability companies (LLCs) with 20 or fewer full-time employees to file new reports with the Treasury Department’s FinCEN bureau. The reports contain business owners’ personally identifiable information and the law expands FinCEN’s regulatory authority to 30 million small businesses. Small business owners have long raised concerns about this law’s federal reporting requirements and associated privacy concerns.
When NFIB surveyed its membership on this issue, 80% of small business owners opposed Congress requiring small business owners to file paperwork with the Treasury Department each time they form or change ownership of their businesses.
On July 19, 2023, NFIB Vice President of Federal Government Relations Kevin Kuhlman testified before the U.S. House of Representatives Committee on Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions in a hearing titled, “Potential Consequences of FinCEN’s Beneficial Ownership Rulemaking.” The hearing addressed the beneficial ownership information requirements for small businesses. Read NFIB’s press release here.
Kuhlman stated,“NFIB has long opposed beneficial ownership information (BOI) reporting requirements because the regulations impact only small businesses under the threat of severe penalties. BOI reporting requirements were buried in an amendment as part of a large and unrelated bill. FinCEN has overreached in implementing the legislation, failing to both minimize reporting burdens on small businesses and provide clarity to small businesses. Finally, FinCEN is lacking in education and outreach to the small business community and few small businesses are aware of their requirements that begin in less than six months… “Ultimately, NFIB believes Congress should repeal the Corporate Transparency Act and better target revised anti-money laundering laws. This legislation establishes a massive government dragnet with the personally identifiable information of 32.6 million law-abiding small business owners with the hope that criminal money launderers will fess up and admit that they are hiding behind shell companies.”
The Financial Crimes Enforcement Network Improvements Act
In a letter to the Treasury Department, NFIB recommended nine adjustments to protect small businesses from overreaching regulations proposed, some of which are being addressed in H.R. 7623, the Financial Crimes Enforcement Network Improvements Act. NFIB supports the Financial Crimes Enforcement Network Improvements Act, which would:
- Provide for the appointment of the Director of FinCEN by the President of the United States, by and with the advice and consent of the Senate.
- Establish a special Deputy Inspector General for FinCEN with a substantial priority to help make sure that FinCEN protects the civil liberties and privacy of Americans.
- Establish a Civil Liberties Protection Officer for FinCEN in Treasury’s front office.
- Require transparency in rulemaking from FinCEN.
- Require FinCEN to provide Congress and the public with documents similar to the Freedom of Information Act.
- Require the Director of FinCEN to regularly testify before Congress as well as promptly report to Congress on any unlawful activity by FinCEN employees.