Corporate Transparency Act of 2019

Floor Speech

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Mr. BARR. Mr. Chairman, I thank my friend from North Carolina for yielding.

Mr. Chairman, I rise today in opposition to H.R. 2513, the Corporate Transparency Act. I do so regrettably.

While I agree with the objective of the bill to help law enforcement crack down on the financing of illegal operations, this bill's solution places undue burdens on small businesses and presents unacceptable due process concerns for millions of small business owners whose sensitive personally identifiable information will be collected and stored in a new Federal database accessible without a warrant or a Federal subpoena.

I want to thank my friend, the sponsor of this bill, for her good faith attempt to streamline beneficial ownership reporting. I agree with her that we need to do more to combat terrorist financing, money laundering, drug trafficking, and other national security threats. I am sympathetic, also, to the needs of law enforcement to identify the financing sources of illicit operations and shut them down.

That said, the bill before us today seeks to achieve these ends unnecessarily on the backs of America's small businesses. The bill would create additional regulatory reporting requirements for existing and newly created small businesses. These businesses do not have the compliance resources comparable to larger firms. This reporting requirement will take a toll on their productivity and their bottom line.

According to the U.S. Small Business Administration, 95 percent of new firms begin with fewer than 20 employees and, thus, would most likely be subject to the reporting and compliance burdens of this bill. Accounting for this growth and conservative estimates of the time and expenses associated with completing the paperwork required by the bill, the National Federation of Independent Business forecasts that the bill would cost America's small businesses $5.7 billion over 10 years and result in 131 million new hours of paperwork. These are dollars that companies could spend on making new investments or hiring new staff and time they could spend on building their businesses.

H.R. 2513 would require small business owners or officers to report personally identifiable information such as name, Social Security number, and driver's license number to a newly created Federal Government database operated by FinCEN. Law enforcement can access this database without due process, and the sensitive personal information contained in it is subject to the ever-growing threat of malicious cybercriminals.

Even with all the new requirements and privacy concerns created by this bill, it still does not fully address the root issue with current beneficial ownership reporting rules. The supposed justification of the bill is to ease the burden on financial institutions associated with implementing FinCEN's customer due diligence rule. However, H.R. 2513 fails to repeal and replace the CDD rule, and the rule will continue to coexist with the additional regulatory burdens on small businesses created by the bill.

Finally, the bill falls short if the goal is to relieve financial institutions of burdensome reporting requirements that do not materially contribute to countering money laundering and illicit finance. That is because it fails to make inflation-adjusted changes to the thresholds for filing suspicious activity reports and currency transaction reports.

While I recognize the need to combat financing of illicit operations, this bill attempts to do so by placing unjustified reporting requirements on our small businesses that could cost them time and money and hinder their growth.

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Mr. BARR. So, to conclude and to summarize, Mr. Chairman, we can and should update our AML/BSA laws, and we can and should give FinCEN and law enforcement better visibility into the beneficial ownership information of firms vulnerable to money laundering and illicit finance, but this is the wrong solution. I am hopeful that the concerns of Main Street small businesses can be addressed if this bill moves to the U.S. Senate.

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