In the fall, Senators Mark Warner (D-Virginia) and Tom Cotton (R-Arkansas) introduced bipartisan legislation designed to combat money laundering, terrorist financing and improve corporate transparency. S. 2563, “the Illicit Cash Act,” seeks to require shell companies to disclose their true owners to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
Under the bill, all current businesses with under 20 employees would have two years to comply with the new requirement or upon incorporation of a new business. FinCEN would require the disclosure of any individual who “owns 25 percent or more of the equity interests or receives substantial economic benefits” from the business. The legislation defers to regulators at the Treasury Department to define “substantial economic benefits.” The penalties for failure to comply with these reporting requirements are quite severe with civil penalties up to $10,000 and criminal penalties of up to four years in prison.
When this legislation was introduced at the end of September, the Big “I” was the only producer group that advocated on behalf of agents and brokers and sought to exclude them from this new onerous federal reporting requirement.
The Big “I” was successful in obtaining a full exemption for agents and brokers in the bill 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.
The Big “I” will continue to advocate for exemptions for insurance producers in similar pieces of legislation that may be introduced or considered in the U.S. Senate.
Joseph Cortina is Big “I” director of federal government affairs.