Rep. Patrick McHenry (R-N.C.), chair of the House Financial Services Committee (FSC), introduced two bills last month intended to force reforms at the Financial Crimes Enforcement Network (FinCEN). The bills are in response to FinCEN's recent rules update on reporting provisions of beneficial ownership information.
"These bills will bring much-needed transparency and accountability to the agency, while ensuring small businesses’ sensitive information and Americans’ privacy are protected in its beneficial ownership reporting regime," the FSC stated in its June 12 announcement of the bills.
McHenry, along with other Republican lawmakers, is seeking clarity from FinCEN and U.S. Treasury Secretary Janet Yellen regarding the reporting responsibilities of small businesses under FinCEN's beneficial ownership reporting rule. The final rule, issued Sept. 29, implemented the bipartisan Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting provisions.
The BOI reporting rule is designed to enable FinCEN and other agencies to safeguard the U.S. financial system and national security by providing "essential information" to law enforcement agencies and others "to help prevent drug traffickers, fraudsters, corrupt actors such as oligarchs, and proliferators from laundering or hiding money and other assets in the United States," the BOI fact sheet states.
"Illicit actors frequently use corporate structures such as shell and front companies to obfuscate their identities and launder their ill-gotten gains through the United States," FinCEN states in the fact sheet. Such maneuvers threaten the U.S. economy and undermine national security by protecting the identity of the beneficial owners, "while disadvantaging small U.S. businesses who are playing by the rules. This rule will strengthen the integrity of the U.S. financial system by making it harder for illicit actors to use shell companies to launder their money or hide assets," the fact sheet states.
The Republican lawmakers have expressed concerns to FinCEN Acting Director Himamauli Das and Secretary Yellen about the agency's plan to educate small businesses about their new reporting obligations. With the rule set to take effect on Jan. 1, 2024, they are calling for a clear plan of engagement to make sure the approximately 32.6 million small businesses which must adhere to the new rule fully understand their responsibilities. Lawmakers argue many small business owners have never heard of FinCEN, let alone know to look at its website for press releases on rule changes.
"They have done this with little transparency and accountability, and a disregard for Americans' privacy rights. In response, Republicans on the House Financial Services Committee are working to comprehensively reform the agency. As part of that effort, I am introducing two bills to boost transparency at FinCEN and ensure it is accountable to the American people. I'm proud to stand with my colleagues to fight back against government overreach and protect the privacy of our constituents,” said McHenry in the press release.
The Accountability Through Confirmation Act of 2023 would require the director of FinCEN be appointed by the President "with the advice and conset of the Senate," to ensure FinCEN's accountability to Congress. The Protecting Small Business Information Act of 2023 would delay the effective date of the BOI reporting requirements from Jan. 1, 2024 until the Access Rule and CDD Congruence Rule are finalized, according to the news release.