Corporate Transparency Act of 2019

Floor Speech

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Mr. HILL of Arkansas. Mr. Chairman, I thank the ranking member.

I am grateful for the opportunity to come to the floor and talk about H.R. 2513, the Corporate Transparency Act.

I want to thank my good friend from New York (Mrs. Carolyn B. Maloney) for her leadership in this area for well over a decade, her hard work, and her determination on improving our anti-money laundering and Bank Secrecy Act rules.

I appreciate the chair of the committee and her work as well.

The legislation addresses how we might combat illicit finance activities by appropriately strengthening the collection of beneficial ownership information.

Now, Mr. Chairman, a beneficial owner is a person who enjoys the benefits of ownership even though the title to some form of property is in another name. We have long debated in Congress the best way for this information to be collected. Let's be clear here. It is being collected by our financial services industry under our know-your-customer rules.

The ability to set up legal entities without accurate beneficial ownership information, however, has long represented a key vulnerability in the U.S. financial system.

As I say, all U.S. banks, brokerage firms, and financial services companies have a know-your-customer obligation to collect ownership information and, importantly, collect beneficial ownership information. This was further defined in May 2008 by a FinCEN rule.

But not all shell companies are established for malicious purposes. Owners might create one temporarily to finance a company that has not yet started operations or to proceed with an acquisition in coming years. But in this instance, they would have no employees and no revenue, so the structure would look like a shell company, but it would be otherwise legal.

It is true, though, there are too many instances of anonymous shell companies serving as a vehicle for ill-intended activities, including money laundering and terrorist financing. The anti-money laundering system and the sanctions system, both independently and in tandem, are more important than ever before, as we have seen in recent debates.

For well over a decade, Congresswoman Maloney, author of the legislation, has been leading and working hard to pass a bill that would enhance our AML regime, including on beneficial ownership. She and I agree, as do all the Members of this House, Mr. Chair, that it is vital to U.S. national security to have a vigorous and good AML/BSA system.

However, I cannot support the legislation as currently written. In my view, H.R. 2513 places a significant burden on small business and, in my view, unnecessarily. The rules have been outlined here.

I believe there is a better path forward, which is why I have long supported aligning tax filing with the collection of beneficial ownership information. Small businesses are already familiar with filing taxes.

A small business already files their taxes, which includes disclosing their owners, their capital, and their business structure. On their returns, they declare domestic and foreign aspects of their business-- all subject to common existing processes and parameters, all subject to privacy, and all subject to existing penalties for failure to accurately report.

I think we can all agree that closing off access to illicit finance is laudable, necessary, and appropriate; and I expect that we can agree that the collection of accurate beneficial ownership information is a step in the right direction. I would just like to see us get there without subjecting small businesses to new, unnecessarily complicated reporting with the burden of exceedingly severe penalties for failure to comply.

Mr. Chairman, I hope that we can reach a simple compromise that sees stronger collection without jeopardizing small business.
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Mr. HILL of Arkansas. Mr. Chair, I want to again thank my friend from New York for her hard work on crafting this legislation. While we have had differences along the way, it is critical that we strengthen our national security and AML BSA system and strengthen the transparency of beneficial ownership.

As I have previously discussed, I am concerned with several aspects of the bill, and I am offering this amendment which I believe will help improve its overall purpose.

When we heard testimony, a retired FBI agent testified to our committee acknowledging that law enforcement wants this data, this new database at FinCEN to search, essentially, without a warrant or a subpoena.

My amendment would require the Financial Crimes Enforcement Network to develop stringent procedures around the beneficial ownership database pertaining to who and how it has been accessed.

Per the bill's requirements, many businesses will be providing this information into a repository that will contain sensitive information. Who can access and how they can access it should have clearer guidelines and ensure that this information is not being inappropriately accessed.

Additionally, the amendment requires FinCEN to report to Congress, annually, the number of times law enforcement, banks, or other parties access the database, how many times it was inappropriately accessed, and the number of subpoenas obtained to gain access to the database. This will ensure that Congress maintains oversight of the database and that banks or law enforcement are not abusing this new system.

Our committee has heard hours of testimony about Federal Government data breaches over these years: OPM, the SEC, IRS, CFPB. As such, we have to make sure this information is as secure as possible.

As previously mentioned, this information is highly sensitive and should remain extremely confidential to the extent possible. As policymakers, we have an obligation to our constituents to ensure that we uphold their privacy, and this amendment will better help us achieve that goal.

I urge my colleagues to support this commonsense amendment. It is good for businesses, good for our bankers and lawmakers, and, ultimately, good for our citizens.

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Mr. HILL of Arkansas. Mr. Chairman, may I ask how much time I have remaining.

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Mr. HILL of Arkansas. I yield such time as he may consume to the gentleman from North Carolina (Mr. McHenry).

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Mr. HILL of Arkansas. Mr. Chairman, I want to thank my friend from New York for her working with me on this amendment. I thank her for accepting it. And I want to thank the Chair of the full committee for its report.

I want to just close and emphasize that under the law as drafted today there are about 10,000 law-enforcement qualified people that can access that database. That is a lot of people, Mr. Chair, that have access to this database that we are concerned about in making sure that it is maintained in a very confidential manner.

I appreciate the consideration of the amendment, and I appreciate its adoption. Mr. Chairman, I yield back the balance of my time.

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