Who could oppose cracking down on money laundering by terrorists, drug dealers and human traffickers? Especially if all it cost was more paperwork?
That’s the argument behind the Corporate Transparency Act, which, as The Wall Street Journal reports, the House Financial Services Committee passed in June.
What’s also true is the the law would hit small businesses with another compliance burden, their confidential information would become less secure, and real criminals are unlikely to be deterred. The bill requires corporations or limited liability companies of fewer than 20 employees or $5 million or less in revenue to disclose details about their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network.
A beneficial owner either exercises substantial control over a company or enjoys substantial economic benefits from it. The idea is to make it more difficult for money launderers to hide behind anonymous shell companies.
These small businesses would have to report details of beneficial owners—e.g., names, dates of birth, addresses, driver’s licenses and Social Security numbers—or face civil and criminal penalties. That could mean $10,000 in fines or up to three years in prison.
Local, state and federal law enforcement would have access to this information without a subpoena or warrant.
Others are pushing back. The American Bar Association says the bill’s definition of beneficial owner is “vague, overly broad and unworkable.” The National Association of Manufacturers and the NFIB are also not on board. Read the full story.