Potential Consequences of FinCEN’s Beneficial Ownership Rulemaking (EventID=116236)

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Connect with the House Financial Services Committee Get the latest news: https://democrats-financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/HouseFinanci... Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Tuesday, July 18, 2023, at 2:00 p.m. (ET) Subcommittee on National Security, Illicit Finance, and International Financial Institutions Chair Congressman Luetkemeyer and Ranking Member Congresswoman Beatty will host a hearing entitled, “Potential Consequences of FinCEN’s Beneficial Ownership Rulemaking." ___________________________________ Witnesses for this one-panel hearing will be: • Kevin Kuhlman, Vice President, National Federation of Independent Business (NFIB) • Jim Richards, Founder and Principal, RegTech Consulting LLC • Pete Selenke, Vice President and Anti-Money Laundering/Bank Secrecy Act Officer, Central Bank (Jefferson City, MO) • Gary Kuhlman, Executive Director, Transparency International US ___________________________________ Background This hearing will give Members of the Financial Services Committee (Committee) the opportunity to hear from key witnesses who can highlight issues with the Financial Crimes Enforcement Network (FinCEN)’s Beneficial Ownership Rulemaking and the unintended consequences that may arise if FinCEN does not properly educate small businesses on the upcoming beneficial ownership information (BOI) reporting rule. The hearing will examine the new beneficial ownership reporting obligation prescribed by the Corporate Transparency Act (CTA) and how FinCEN made the decision to deviate significantly from Congress’ intent when crafting proposed and final BOI rules. The BOI reporting regime regulations go into effect on January 1, 2024. Corporate Transparency Act (CTA) On January 1, 2021, Congress enacted the William M. (Mac) Thornberry National Defense Authorization Act (NDAA) for Fiscal Year 2021 (FY21). Division F of the FY21 NDAA, also known as the Anti-Money Laundering Act of 2020 (AMLA), made significant reforms to the U.S. anti-money laundering (AML) regime. Division F includes AMLA as well as the Corporate Transparency Act (CTA). AMLA sought to strengthen, modernize, and streamline the existing AML regime. In addition, AMLA directs FinCEN to work closely with regulatory, national security, and law enforcement to identify risks and priorities, as well as provide feedback to industry partners. The CTA is intended to target terrorists and other bad actors set up corporate or small business structures to move “dirty” money through the U.S. financial system. Both domestic and foreign companies that are registered to do business in the U.S. are subject to the CTA regulations and could face civil and criminal penalties if they do not comply with the BOI regulations. As laid out by FinCEN, BOI information is to be disclosed and updated via an electronic report that will be accessible and maintained by FinCEN. This IT system is known as the Beneficial Ownership Secure System (BOSS). Companies formed on or after the January 1, 2024, effective date will be required to report BOI information 30 calendar days after registering with a secretary of state, whereas companies formed prior to the effective date will have until January 1, 2025 to report. The CTA requires each agency requesting BOI from the BOSS system to certify that a permanent, auditable system of records has been established and will be maintained. The records will describe: each request, how the information is used, and how the beneficial ownership information is secured. Financial Crimes Enforcement Network (FinCEN) FinCEN was first established in 1990 as an office within Treasury by order of the Secretary of the Treasury. Congress later codified the framework and mandate for FinCEN in 31 U.S.C. § 310. The statutory mandate for the new office was to analyze financial data and provide strategic support to law enforcement authorities. FinCEN’s current mission is “to safeguard the financial system from illicit use, combat money laundering, and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.” It accomplishes this mission by identifying the flow of financial resources to terrorists, terrorist organizations, money launderers, and other criminal elements through intelligence analysis and sharing the lead data it develops with relevant law enforcement, intelligence community, and international partners for investigation and disruption. Under the negotiated CTA, FinCEN is authorized to collect and disclose the information that is reported pursuant to the CTA to authorized government authorities and financial institutions. This information can provide critical data to “law enforcement, national security agencies, and others to help prevent... Hearing page: https://democrats-financialservices.house.gov/events/eventsingle.aspx?EventID=410633