Luetkemeyer, McHenry Send Letter Demanding Beneficial Ownership Rulemaking Protect Small Businesses and Adhere to Congressional Intent
Washington, March 2, 2022
WASHINGTON, DC - Today, the top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), and the top Republican on the House Small Business Committee, Blaine Luetkemeyer (MO-03), sent a comment letter regarding the Treasury Department’s Notice of Proposed Rulemaking (NPRM) on Beneficial Ownership Information Reporting Requirements.
The Republican Leaders highlight numerous concerns with the NPRM, including that it’s too complex, too broad, and significantly deviates from Congressional intent. The lawmakers also demand the rulemaking’s impact on small businesses be minimal.
Read the full letter here.
Read key excerpts from the letter:
“Dear Secretary Yellen and Acting Director Das:
“We write to express our serious concern with the Department of the Treasury’s Notice of Proposed Rulemaking titled “Beneficial Ownership Information Reporting Requirements” (NPRM), released on December 8, 2021. The NPRM in its current form is too complex, overly broad, and deviates significantly in many ways from Congress’ intent as it relates to the new beneficial ownership information reporting regime. Moreover, we are concerned that if the issues raised in this letter and by the hundreds of interested parties are not addressed, the final rule will not only harm legitimate small businesses but will undoubtedly create additional loopholes for bad actors to exploit.
“Congress made clear its agreed-upon framework for reporting and collecting beneficial ownership information in Division F of the National Defense Authorization Act, Fiscal Year 2021. This statutory framework is intended to accomplish three objectives. The first is to stop bad actors from using “shell companies” to exploit the financial system to conduct terrorism or other illicit activities. In addition, the framework is intended to minimize any new burdens the new regime will have on reporting companies, particularly smaller companies. Finally, the statutory framework is intended to provide clear rules of the road for reporting companies regarding their beneficial ownership responsibilities.
“The issues raised above only touch the surface. Yet, together with the concerns expressed by the hundreds of interested parties, deepen our concern about the Department’s underlying motivation for the new beneficial ownership information reporting regime. Let us be clear, previous partisan attempts to reform the beneficial ownership reporting regime were rejected by Congress. In fact, proposals to: (1) establish an open and vast collection regime, like that established in the United Kingdom; (2) impose numerous and costly reporting requirements on small businesses; (3) jeopardize the privacy and security of small businesses’ personal identifiable information; and (4) enable small businesses’ PII to be accessed with few limitations, were met with fierce resistance.
“Given these potential costs, the Department of Treasury must ensure that any new reporting burdens on small businesses are minimal. This includes rescinding the current Customer Due Diligence Rule set forth in 31 CFR 1010.230 (b)-(j) immediately upon the effective date of this NPRM. We are disconcerted by references to the rescission being addressed in subsequent rulemaking. Congress intended these provisions to be rescinded immediately upon the effective date of this regulation not years after the fact. This is to ensure that there is one clear rule that sets out the responsibilities of reporting companies – not multiple reporting regimes. This error must be addressed immediately.
“We are optimistic you understand the magnitude of our concern. The statutory framework reflects bipartisan consensus that the Department of the Treasury stay within the four corners of the statute, obtain evidence, and build out a new reporting and collection regime based on direct evidence rather than anecdotes that create more loopholes for bad actors to exploit at the expense of legitimate businesses. We urge you to go back to the statutory framework and revise the NPRM accordingly. We look forward to working with you to establish a beneficial ownership information reporting regime that Congress intended.”