HFS Considers Criticisms of FinCEN Beneficial Ownership Rule

At a hearing before the House Financial Services Committee, witnesses critiqued FinCEN’s "Beneficial Ownership" rule.

At the hearing, titled "Potential Consequences of FinCEN’s Beneficial Ownership Rulemaking," the following witnesses testified:

• National Federation of Independent Business ("NFIB") Vice President Kevin Kuhlman. Mr. Kuhlman underscored NFIB’s longstanding opposition to FinCEN’s beneficial ownership information ("BOI") reporting requirements. He argued that (i) the final rule threatens small businesses with "severe penalties," (ii) FinCEN overreached by failing to reduce reporting burdens on small businesses and to provide transparency and (iii) FinCEN failed to make small businesses aware of the impact of the final rule, which is to become effective in less than six months.
• RegTech Consulting LLC Founder and Principal James Richards. Mr. Richards argued that FinCEN should not be putting out "remarkably complex" proposals that go beyond Congressional intent. He noted that FinCEN acknowledged its own "resource constraints," and said it would have been more appropriate for the agency to put out simpler incremental proposals.
• Central Trust Bank Vice President and AML/BSA Officer and on behalf of the American Bankers Association, Pete Selenke. Mr. Selenke argued that FinCEN’s beneficial ownership regime was inconsistent with Congressional intent. He said that Congress should (i) remove rule limitations and allow banks to effectively use beneficial ownership registry information for all BSA compliance purposes, (ii) "reduce costs and burdens on banks, not increase them;" (iii) ensure the accuracy of beneficial ownership registry in order to allow banks to rely on the information, and (iv) educate the newly defined "reporting companies" about their new legal obligations before the beneficial ownership information registry compliance date on January 1, 2024.
• Transparency International US Executive Director Gary Kalman. Mr. Kalman raised concern with the "access" provision in the rule, which he said would create "unnecessary and ill-advised obstacles" for law enforcement and financial institutions required to assist in AML checks.

According to the Financial Services Majority Staff memorandum, the Committee is considering the following legislation:

• H.R. 4035, "Protecting Small Business Information Act of 2023"

• H.R. _____, "Protect Small Business & Prevent Illicit Financial Activity Act of 2023"

• H.R. 3244, "Stop Fentanyl Money Laundering Act of 2023"

• H.R. _____, "Iran-China Energy Sanctions Act of 2023"

• H.R. _____, "Foreign Affiliates Sharing Pilot Program Extension Act"

• H.R. _____, "Combatting Foreign Surveillance Spyware Sanctions Act"

• H.R. _____, "Russia and Belarus Financial Sanctions Act"

• H.R. ____, "Small Business Working Group Act"

• H.R. _____, "The INCSR Improvement Act"