The U.S. Senate Committee on Banking, Housing and Urban Affairs considered testimony from non-government organizations about how draft legislation that would require businesses to report beneficial ownership information might impact small businesses. The Committee heard previously from the Financial Crimes Enforcement Network ("FinCEN"), the FBI and the Office of the Comptroller of the Currency ("OCC") on the benefits of collecting beneficial ownership information.

Greg Baer, CEO of the Bank Policy Institute, expressed his approval of the draft legislation and dismissed concerns regarding privacy and the potential impact of a new reporting requirement on small businesses. Specifically, Mr. Baer defended the draft legislation, saying that it would:

  • require the disclosure of minimal information ("less information than one must provide to book a flight on any airline");
  • most often require only one person to disclose such information, since the requirement applies only to an individual who owns more than 25 percent of a covered company or exercises substantial control;
  • not increase reporting obligations beyond those already required of a small business with a bank account; and
  • keep ownership information private from the general public and require only information that is already available to the DMV and the IRS.

Karen Harned, Executive Director of the National Federation of Independent Business Small Business Legal Center, argued that American small business owners are the "least equipped to handle" the proposed reporting requirements. Ms. Harned stated that the legislation would:

  • punish small business owners who may not or may incorrectly file these disclosures, possibly because they are (i) unaware of FinCEN, (ii) skeptical of such a far-reaching data collection request or (iii) do not understand who is considered a "beneficial owner";
  • be antithetical to existing laws that require a government agency to obtain a warrant or subpoena in order to acquire beneficial ownership information; and
  • enact a burdensome reporting requirement on "mom and pop" businesses that is "unlikely" to significantly reduce the targeted illicit activities.

Executive Director of the Financial Accountability & Corporate Transparency ("FACT") Coalition Gary Kalman emphasized the importance of eliminating anonymous corporations because they are used for money laundering, human trafficking, drug trafficking, grand corruption, criminal enterprises and other threats to U.S. national security. Mr. Kalman noted that over 75 percent of small business owners surveyed said they are more concerned about losing contracts to fraudulent anonymous companies than about the burden of reporting beneficial ownership.

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