Beneficial Ownership Bill Moves in Senate 

November 6, 2019

Legislation similar to the Corporate Transparency Act (H.R. 2513) is pending in the Senate. Title IV of the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act (S. 2563) is authored by Sens. Mark Warner (D-Va.) and Tom Cotton (R-Ark.) and is substantially similar to the CTA—which NSBA opposes. This bill now has eight cosponsors and is gaining momentum. The ILLICIT CASH Act would impose duplicative, burdensome reporting burdens on millions of small businesses in the United States and threatens the privacy of law-abiding, legitimate small-business owners.

Under this legislation, millions of small businesses would be required to register personally identifiable information with FinCEN upon incorporation, file updated reports within 90 days of any ownership changes, and file additional updated reports within a year of any ownership information changes, such as an expiration of a driver’s license number. Failure to comply with these reporting requirements would be a federal crime with civil penalties of $500 per day up to $10,000, criminal penalties of up to 4 years in prison, or both.

The ILLICIT CASH Act raises significant privacy concerns as the proposed FinCEN “beneficial ownership” database would contain the names, dates of birth, addresses, and unexpired drivers’ license numbers or passport numbers of millions of small business owners. Unlike the CDD rule, which requires law enforcement to obtain a subpoena or warrant prior to accessing beneficial ownership information from financial institutions, the ILLICIT CASH Act would make this information accessible upon request “through appropriate protocols” to any local, state, tribal, or federal law enforcement agency or to law enforcement agencies from other countries via requests by U.S. federal agencies.

Recent reports of the Foreign Intelligence Surveillance Court’s admonishing the Federal Bureau of Investigation for improperly accessing bulk data collected by the National Security Agency demonstrates that federal law enforcement databases can be misused. A subpoena or a warrant would safeguard the privacy of small business owners.

Senate Banking Committee Chairman Mike Crapo (R-Idaho) may schedule a committee markup on the ILLICIT CASH Act (S. 2563) before the end of the year. The legislation, which would also make several updates to the Bank Secrecy Act, is emerging as the Senate’s primary vehicle for addressing shell company transparency issues, which Senator Crapo supports.

Please contact your lawmakers urging them to oppose the ILLICIT CASH Act, today.