The Big “I" was successful in securing a full exemption for independent insurance agents and brokers from duplicative small business beneficial ownership reporting requirements.
This week, after months of negotiations on several issues, the U.S. House of Representatives passed the “National Defense Authorization Act" (NDAA).
Among the negotiated issues was a provision 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 by showing that insurance producers already provide this beneficial ownership information to state regulators and that the additional burden of providing it to the federal government would be duplicative and unnecessary.
Throughout the legislative process, the Big “I" was the only producer group that advocated on behalf of agents and brokers to exclude them from this new onerous requirement.
Without this exemption, the beneficial ownership provision would have required agencies with fewer than 20 employees to file new reports on their beneficial ownership with the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). Agencies would have had 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. The penalties for failure to comply with these reporting requirements are severe, with civil penalties of up to $10,000 and criminal penalties of up to two years in prison.
The Big “I" would like to thank Sen. Mike Crapo (R-Idaho), chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs, and Rep. Carolyn Maloney (D-New York) for their determined work on this provision. Throughout the NDAA negotiations, both Chairman Crapo and Rep. Maloney worked diligently and in a bipartisan way to improve this legislation and make sure insurance agents and brokers remain free from these duplicative burdens while still ensuring that bad actors would be prevented from using anonymous shell companies to hide illicit activities.
The U.S. Senate is expected to pass the legislation in the coming days, but President Trump has indicated that he might veto the legislation over issues unrelated to the beneficial ownership provision. At this point, it is too early to tell if Congress would have the votes to override a presidential veto. If the President does veto the legislation, the Big “I" expects to see action on the issue early in 2021. Stay tuned to News & Views in the coming weeks for updates on this important legislation.
Wyatt Stewart is Big “I" assistant vice president of federal government affairs.