Corporate Transparency Act of 2019

Floor Speech

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Mr. DAVIDSON of Ohio. Mr. Speaker, I thank my colleagues for the important reforms that have been included in this bill, very thoughtfully, to reform our Bank Secrecy Act.

The United States puts heavy burdens on banks to know their customers, to protect our country and our financial system, and to make it easier for the folks in law enforcement, and, frankly, all layers of national security to defend America.

It is an important way that our sanctions regime works. It is an important way that we detect and prosecute crime. And it has worked very successfully for years in the current form.

The biggest complaint is often that we required too much of banks. And so that led to this consumer due diligence rule that FinCen put out that put an extra burden on banks, some would say a redundant burden on banks, to report the beneficial ownership of their companies.

And so that created this provision that is now blended into a single bill rather than a standalone bill that was known as the Corporate Transparency Act. This is a horrible solution to a real problem. And the solution is horrible because it presumes that everyone that would own a company that has fewer than 20 employees is somehow part of an illicit finance scheme in America. The smallest, least-sophisticated businesses are now required to report annually and more frequently if they change the composition of the beneficial owners.

This is a violation of civil liberties and constitutional rights that our body should take seriously. Historically, that has been something that has united the parties.

When Congress did the reforms to the PATRIOT Act and the Foreign Intelligence Surveillance Act, they put these provisions in place with great hesitation because it created a big database and collected a great deal of information.

This data would not be subject to subpoena or control. It is a horrible solution to a real problem, and I urge greater consideration of alternatives in opposition to this bill.
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Mr. DAVIDSON of Ohio. Mr. Chairman, today, I offer an amendment to address the serious flaws within the underlying bill.

Under the guise of tracking money laundering, this bill imposes a crushing paperwork burden squarely targeted at small business owners. It creates a massive new Federal Government database containing the addresses of innocent American citizens and will do nothing to track down criminals.

Under the Obama administration, FinCEN issued regulations that banks collect the beneficial ownership information of these businesses. The regulations have proven so confusing, burdensome, and unnecessary that banks have sought relief from these regulations.

This bill effectively shifts the reporting burden onto mom-and-pop businesses that have never even heard of FinCEN.

The bill adopts a different definition of beneficial ownership that is even more confusing and vague than the one used by Treasury's rules, which has already puzzled regulators and banks for years.

According to the Congressional Budget Office, the bill would generate 25 to 30 million new filings every year. Failure to comply could result in jail time up to 3 years, thousands of dollars in fines, compromise of private information, and more.

The bill also raises serious privacy concerns by creating yet another database that is effectively the first-of-its-kind Federal registry of small businesses and small business ownership. It contains no subpoena or warrant-type restrictions for Federal law enforcement to access.

In the era of naming and shaming of companies and owners for political purposes, and findings that Federal law enforcement have abused their existing authorities in accessing section 702 FISA data, this bill should give serious pause about how we as Members of Congress protect civil liberties for American citizens.

My amendment would simply strike the underlying bill's burdensome mandate, nullify the Obama-era regulations on banks, and instead require FinCEN to go back to the drawing board by reviewing how already existing Federal datasets from banking know-your-customer and anti- money laundering rules can assist law enforcement in determining the beneficial owners of businesses.

As my colleague French Hill has offered, the IRS already contains all of this information.

Lastly, I would say that if we are going to criminalize private ownership of businesses, why not do that in the beginning rather than criminalize failure to report to an agency that doesn't exist.

All of these questions have failed to be addressed directly by the executive branch, and they are blown through with the way this bill addresses the problem.

This type of information already exists. We do not need another Federal database prone to be abused or a crushing mandate that will harm law-abiding Americans and be ignored by criminals.

Mr. Chair, I urge support for my amendment and opposition to the bill without it.

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Mr. DAVIDSON of Ohio. Mr. Chairman, may I inquire as to the balance of my time.

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Mr. DAVIDSON of Ohio. I yield to the gentleman from North Carolina (Mr. McHenry).

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Mr. DAVIDSON of Ohio. Mr. Chairman, I yield myself the balance of my time to close.

In closing, I would simply say that this would presume that criminals are somehow going to cease their criminal activity, all because they have to file a report.

The reality is this is going to criminalize business ownership, violate the civil liberties of business owners across America, and make them vulnerable to further abuse by criminals.

Mr. Chair, I urge support for this amendment and opposition to the underlying bill without its adoption.

Mr. Chair, I yield back the balance of my time.

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