By AML Intelligence Correspondent
Financial Crimes Enforcement Network (FinCEN) Director Andrea Gacki has reminded small businesses of their obligations under new beneficial ownership rules ahead of a looming filing deadline and a legal challenge.
In a statement, FinCEN said Gacki and senior FinCEN leaders conducted an outreach event in Iowa on May 31 to engage with the business community regarding the Corporate Transparency Act, which will pave the way for a U.S. beneficial ownership register.
“Director Gacki provided remarks on beneficial ownership information reporting pursuant to the Corporate Transparency Act, a bipartisan law meant to curb illicit finance by requiring many companies to report basic information to the federal government about who ultimately owns or controls them,” FinCEN said.
“This important law will help untangle opaque corporate structures and level the playing field for American small businesses by allowing law enforcement to pursue criminals that operate illicitly through anonymous shell companies.”
The FinCEN outreach event also occurred just days after the National Federation of Independent Businesses (NFIB) filed a lawsuit challenging the Corporate Transparency Act and beneficial ownership reporting requirements.
The lawsuit, which was against the U.S. government in the District Court for the Eastern District of Texas, argues that the Corporate Transparency Act “exceeds Congress’s authority over the states”.
It also said the Act and beneficial ownership requirements “improperly compels speech and burdens associations, it unconstitutionally compels disclosure of private information, and the reporting rule is not in accordance with the law”.
Beth Milito, Executive Director of NFIB’s small business legal centre, said the Corporate Transparency Act “created one of the largest reporting requirements for small businesses”.
“Small businesses are at risk of being subjected to civil and criminal penalties for simple paperwork violations and must give every level of the government access to private and sometimes confidential information of millions of small business owners,” she said.
“The Corporate TRansparency Act is unconstitutional, and we ask the Court to prohibit the Treasury Department and FinCEN from enforcing the Act and beneficial ownership requirements.”
The FinCEN also came after the organisation recently extended the deadline for companies to file beneficial ownership information.
Previously, it had been planned that from 1 January 2024, new businesses would have 30 days to submit beneficial ownership information to officials. In November, FinCEN announced that this would be extended to 90 days for new businesses.
Meanwhile, companies formed before the start of 2024 have until 1 January 2025 to file the information.
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