The Big “I” was successful in securing a full exemption for independent insurance agents and brokers to the “FY21 National Defense Authorization Act,” which was passed by the House.
The U.S. House of Representatives recently passed the “FY21 National Defense Authorization Act" (NDAA) which included an amendment that would create a burdensome new federal reporting requirement for many small businesses. However, the Big “I" was successful in securing a full exemption for independent insurance agents and brokers.
The amendment was introduced by Rep. Carolyn Maloney (D-New York) and is similar to legislation that passed the House in October—in which the Big “I" also secured an exemption for independent insurance agents and brokers.
The amendment 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). All businesses would have to comply with the new requirement annually starting within two years of the law's enactment for existing businesses or upon the incorporation of a new business.
FinCEN would require the disclosure of any individual who “receives substantial economic benefits from the assets" of a business. The legislation defers to regulators at the Treasury to define “substantial economic benefits." The penalties for failure to comply with these reporting requirements are quite severe with civil penalties of up to $10,000 and criminal penalties of up to three years in prison.
Throughout the legislative process, the Big “I" was the only producer group that advocated on behalf of agents and brokers in an attempt to exclude them from this new onerous requirement. The Big “I" was successful in including a full exemption for agents and brokers in the amendment by showing that insurance producers already provide beneficial ownership information to state regulators and that the additional burden of providing it to FinCen would be duplicative and unnecessary.
On the U.S. Senate side, there was also a discussion of including a similar amendment in the Senate NDAA bill but that did not progress. The Big “I" is actively engaged with Senate Banking Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio) on the possibility of the amendment being included in any next COVID-19 relief legislation being discussed. The Big “I" will remain vigilant to ensure that the agent and broker exemption is included in any Senate proposal.
Joseph Cortina is Big “I" director, federal government affairs.