William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021

Floor Speech

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Mr. HILL of Arkansas. Madam Speaker, I rise today in opposition to Division F, the Corporate Transparency Act provision, within Amendment 499 to H.R. 6395, the William M. (Mac) Thornberry National Defense Authorization Act (NDAA) for Fiscal Year 2021.

This amendment is part of a larger of package of amendments that the House is voting for en bloc. Many of those provisions I support. I would like to emphasize that my remarks only apply to certain provisions within Amendment 499.

Specifically, I do not support Division F of the amendment which is the text that relates to H.R. 2513 which passed the House floor on October 22, 2019. The legislation addresses how we might combat illicit finance activities through the collection of beneficial ownership information.

I did not support the legislation when it passed the House floor, and I do not support it as a provision in amendment 499. In fact, I have long advocated against this policy since I was elected to Congress over five years ago.

The collection of beneficial ownership has been debated in Congress for a long time as the ability to set up legal entities without accurate beneficial ownership information, has long represented a key vulnerability in the U.S. financial system.

Congresswoman Maloney, the leader of the legislation, has been trying to pass a bill that would collect beneficial ownership for over a decade.

I agree that knowing where money is coming from, where it is going, and in whose hand it sits is vital to U.S. national security.

However, I cannot support the text as written as it places significant burden on small businesses. The legislation creates a new regulatory database within Financial Crimes Enforcement Network (FinCEN), a law enforcement unit, which most small businesses have never even heard of. And, even more alarming, if they don't comply, they could face a penalty of up to $10,000 and a prison sentence of up to 3 years.

This could create significant unintended consequences for a large portion of the economy's commerce.

I believe there is a better path forward, which is why I have long supported aligning tax filings with collection of beneficial ownership information--a regulation small businesses already understand.

Furthermore, it is critical to note that the beneficial ownership information is already required and is already being collected. The Customer Due Diligence (CDD) Rule, which took effect in May 2018 requires banksto identify and verify the identity of the beneficial owners of companies opening accounts.

The CDD rule is operational and effective. Why would we upend this regulation, that has been working for over two years, to place unnecessary burdens on our local dry cleaners, our farming community, or the realtor that sold you your house, or any other small business? These are the types of individuals that will have to comply FinCEN, an organization they have never heard of, if this amendment becomes law.

We should be able to find a solution to collect this information that alleviates the bank burden while not subjecting small businesses to unnecessarily complicated reporting requirements.

For these reasons, I cannot support Ms. Maloney's amendment.

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