On Thursday, the U.S. Senate Banking Committee held a hearing to follow up on recent draft legislation designed to improve corporate transparency, strengthen national security and help law enforcement combat illicit financial activity.
The draft legislation, circulated by Sens. Mark Warner (D-Virginia), Tom Cotton (R-Arkansas), Doug Jones (D-Alabama) and Mike Rounds (R-South Dakota), would require nearly every small business with fewer than 20 employees to file new reports on their beneficial ownership with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The new requirement would be forced upon existing businesses within two years of the law’s enactment, new businesses at incorporation and every business within 90 days after a change in beneficial ownership.
These reports to FinCEN would require the disclosure of any individual who “exercises substantial control over a business or receives substantial economic benefits from such entity.” Failure to comply with these reporting requirements would be a federal crime with civil penalties of up to $10,000 and criminal penalties of up to 3 years in prison. For de minimis violations, a person could be liable for a civil penalty of up to $500 per day.
The draft legislation includes a list of industries that are excluded from these reporting requirements, but does not include an exemption for insurance agents and brokers. The Big “I” will advocate for agents and brokers to be exempt from this bill as insurance producers already provide this information to state regulators. Providing it to FinCEN would be duplicative and burdensome.
While the draft legislation encompasses numerous policy areas and topics, similar but narrower legislation in the U.S. House of Representatives from Reps. Carolyn Maloney (D-New York) and Peter King (R-New York) recently passed out of the House Financial Services Committee with a vote of 43-16.
In the House bill, the Big “I” strongly advocated to have “insurance producers” added to the list of industries excluded from this bill—and succeeded. The Big “I” was the only producer group to advocate on behalf of agents for the House bill and will work to achieve a similar exemption in the Senate bill.
Joseph Cortina is Big “I” director of federal government affairs.
