[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                              
                UNDER THE MICROSCOPE: EXAMINING FINCEN'S 
                  IMPLEMENTATION   OF   THE    CORPORATE 
                  TRANSPARENCY ACT

=======================================================================




                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               ----------                              

                              HEARING HELD
                             APRIL 30, 2024

                               ----------                              




               [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





            Small Business Committee Document Number 118-048
             Available via the GPO Website: www.govinfo.gov 











             

               UNDER THE MICROSCOPE: EXAMINING FINCEN'S 
           IMPLEMENTATION OF THE CORPORATE TRANSPARENCY ACT











               UNDER THE MICROSCOPE: EXAMINING FINCEN'S 
                 IMPLEMENTATION   OF   THE    CORPORATE 
                 TRANSPARENCY ACT

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION
                               __________

                              HEARING HELD
                             APRIL 30, 2024
                               __________





                [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                              

            Small Business Committee Document Number 118-048
             Available via the GPO Website: www.govinfo.gov 






                                ------

                   U.S. GOVERNMENT PUBLISHING OFFICE 

55-252                     WASHINGTON : 2024 
















             
                   HOUSE COMMITTEE ON SMALL BUSINESS

                    ROGER WILLIAMS, Texas, Chairman
                      BLAINE LUETKEMEYER, Missouri
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                         BETH VAN DUYNE, Texas
                         MARIA SALAZAR, Florida
                          TRACEY MANN, Kansas
                           JAKE ELLZEY, Texas
                        MARC MOLINARO, New York
                         MARK ALFORD, Missouri
                           ELI CRANE, Arizona
                          AARON BEAN, Florida
                           WESLEY HUNT, Texas
                         NICK LALOTA, New York
                          CELESTE MALOY, Utah
               NYDIA VELAZQUEZ, New York, Ranking Member
                          JARED GOLDEN, Maine
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                          GREG LANDSMAN, Ohio
                  MARIE GLUESENKAMP PEREZ, Washington
                        SHRI THANEDAR, Michigan
                       MORGAN MCGARVEY, Kentucky
                       HILLARY SCHOLTEN, Michigan
                          JUDY CHU, California
                         SHARICE DAVIDS, Kansas
                      CHRIS PAPPAS, New Hampshire

                  Ben Johnson, Majority Staff Director
                 Melissa Jung, Minority Staff Director 











                 
                 
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Roger Williams..............................................    19
Hon. Nydia Velazquez.............................................     3
Hon. Dan Meuser (Presiding)......................................     1

                               WITNESSES

Ms. Carol Roth, Small Business Expert and Owner, Chicago, IL.....     5
Mr. Roger Harris, President, Padgett, Athens, GA.................     7
Mr. Timothy M. Opsitnick, Executive Vice President and General 
  Counsel, Technology Concepts & Design, Inc., Cleveland, OH.....     8
Mr. Gary Kalman, Executive Director, Transparency International 
  US, Washington, DC.............................................    10

                                APPENDIX

Prepared Statements:
    Ms. Carol Roth, Small Business Expert and Owner, Chicago, IL.    29
    Mr. Roger Harris, President, Padgett, Athens, GA.............    31
    Mr. Timothy M. Opsitnick, Executive Vice President and 
      General Counsel, Technology Concepts & Design, Inc., 
      Cleveland, OH..............................................    38
    Mr. Gary Kalman, Executive Director, Transparency 
      International US, Washington, DC...........................    45
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    America's Credit Unions......................................    55
    Community Association Institute..............................    57
    Citizens for Responsibility & Ethics in Washington (CREW)....    60
    Engine.......................................................    68
    Financial Accountability and Corporate Transparency (FACT) 
      Coalition..................................................    76
    Main Street Alliance.........................................    79
    National Multifamily Housing Council (NMHC) and the National 
      Apartment Association (NAA)................................   107
    NFIB.........................................................   110
    SBIA.........................................................   116
    Small Business Majority......................................   123
    Associated Builders and Contractors (ABC)....................   126
    Various statements submitted by Carol Roth...................   129

 
                    UNDER  THE  MICROSCOPE:  EXAMINING 
                     FINCEN'S  IMPLEMENTATION  OF  THE 
                     CORPORATE TRANSPARENCY ACT

                              ----------                              

                        TUESDAY, APRIL 30, 2024

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:03 a.m., in Room 
2360, Rayburn House Office Building, Hon. Roger Williams 
[chairman of the Committee] presiding.
    Present: Representatives Williams, Luetkemeyer, Stauber, 
Meuser, Van Duyne, Mann, Alford, Crane, Bean, Maloy, Velazquez, 
Landsman, McGarvey, Scholten, Thanedar, and Davids.
    Mr. MEUSER. [Presiding.] Good morning all. As is tradition 
in the 118th Congress Small Business Committee, we do start 
with a prayer and the Pledge. So I am going to turn it over to 
Congressman Blaine Luetkemeyer to lead us in a prayer.
    Mr. LEUTKEMEYER. Thank you, Mr. Chairman. Everybody bow 
your head, please.
    Heavenly Father, we ask you today to bless our efforts as 
much as you can for the great work that we are trying to do 
here for the citizens of our great country. Please keep our 
military men and women safe as they try to keep us safe.
    You are the ultimate leader of all and so we put our hand 
in yours as you lead us through our day, through our efforts to 
try and do the better job to continue to protect our country, 
lead our country, to continue to provide for our country in a 
way that is helpful to all.
    We ask these things in your name, in your son's name. With 
that, thank you for another great day. And as that, we continue 
to ask for your blessings. Amen.
    Mr. MEUSER. If you would also please stand for the Pledge?
    I pledge allegiance to the flag of the United States of 
America. And to the Republic for which it stands, one nation 
under God, indivisible, with liberty and justice for all.
    Well, thank you very much. Good morning, everyone. I now 
call the Committee on Small Business to order. Without 
objection, the Chair is authorized to declare a recess of the 
Committee at any time. I recognize myself for my opening 
statement.
    I want to welcome you all to today's hearing, which will 
focus on the Financial Crimes Enforcement Network's 
implementation of the Corporate Transparency Act. Just as a 
side note, Chairman Roger Williams is at an important press 
conference, asked to attend with our leadership, and he will be 
with us within the next 15 to 20 minutes.
    But I would like to start by thanking our witnesses for 
joining us today. Your attendance is certainly greatly 
appreciated for taking the time and the travel to be here with 
us, and we value your input and your expertise.
    Congress passed the Corporate Transparency Act to detect 
illegal funds moving through the financial system. If you can 
better detect and prevent illicit funds from entering the 
financial system it should reduce overall criminal behavior.
    For example, FinCEN's beneficial ownership rule is meant to 
show who is profiting from a business activity and reduce the 
number of shell companies used by criminals. This requires some 
businesses with less than 20 employees to disclose ownership 
information of anyone with a 25 percent stake in the company.
    This information is saved to a database for law enforcement 
and financial institutions to help detect criminals that have 
previously been hidden by LLCs or other companies. However, 
FinCEN's implementation of this law and the corresponding 
regulations have been overly broad, leading to unnecessary 
regulatory burdens on our nation's job creators.
    These concerns coming from the Small Business Committee 
have overshadowed many of the benefits of the Corporate 
Transparency Act. Nearly half of small business owners said 
they had no idea what the Corporate Transparency Act is and had 
never heard of the government agency FinCEN, and suddenly they 
are getting something in the mail asking for personal 
information with the threat of massive fines if they do not 
comply.
    When some businesses have received these notices, they have 
turned to their lawyers or accountants or congressional offices 
for help to fulfill these requirements. However, we are hearing 
that the rules are written in a way that makes these trained 
professionals hesitant or unwilling to take on this task. This 
is a telltale sign that something has gone wrong in 
implementing this law.
    In addition to confusing regulations coming out of FinCEN, 
serious privacy concerns have been raised about this data 
collection. In 2021, an employee at FinCEN leaked the financial 
information of President Trump's former campaign manager, Paul 
Manafort, to smear their political rival. The employee who 
leaked the information rightfully received a 6-month prison 
sentence.
    However, with the changes in the Corporate Transparency Act 
many more people have access to this type of financial 
information. And business owners are rightfully concerned that 
their data could be leaked, stolen, or used against them. The 
Biden administration's implementation of this law fails to 
strike the balance in detecting illicit activities in our 
financial system and burdening all small businesses with 
expensive new mandates.
    I hope this hearing sheds some light on the many challenges 
that our nation's job creators are facing and will begin to 
work correcting--on correcting some of these issues coming out 
of FinCEN.
    I would like to once again thank our witnesses for being 
here with us today. We look forward to our meeting--to our 
hearing.
    And with that, I will now yield to our distinguished 
Ranking Member from New York, Ms. Velazquez.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman and good morning, 
everyone. Thank you for being here.
    The Corporate Transparency Act is landmark legislation 
aimed at cracking down on criminals, both foreign and domestic, 
who for years have been exploiting weak federal laws to engage 
in illegal activity through anonymous shell companies here in 
the United States.
    Passed in 2021 with broad bipartisan support, the CTA 
requires the Treasury Department's Financial Crimes Enforcement 
Network to develop and maintain a registry of the real 
beneficial owners of established businesses.
    Establishing a BOI registry enables law enforcement to 
better target oligarchs, kleptocrats, and terrorist 
organizations who use anonymous shell companies to launder 
illicit funds, evade taxes, finance terrorism, and facilitate 
bribes to corrupt public officials. Not only do these anonymous 
shell companies do substantial harm and present a threat to our 
national security, but they also undermine competition here at 
home by taking advantage of legitimate small businesses.
    Prior to the CTA's passage there were numerous examples of 
criminals' utilization of anonymous shell companies to engage 
in illegal activity. For instance, an anonymous company 
associated with the Taliban was able to secure contracts with 
the Department of Defense to supply American troops in 
Afghanistan.
    Foreign leaders use shell companies to hide their 
involvement in the drug trade and loan their money to 
Hezbollah, and Chinese drug traffickers use shell companies to 
sell deadly fentanyl to Americans here at home.
    Criminals have also used anonymous companies to sell 
billions of dollars of counterfeit goods from luxury brands and 
American consumers has been sold billions of dollars in 
counterfeit medicines and medical products from India and 
China.
    The problems do not stop at national security and 
undermining consumer welfare. These anonymous entities are 
responsible for exploiting resources intended for real American 
small businesses. According to a GAO report from 2023, over 
half the charges for fraud in the PPP and EIDL program involved 
the use of shell companies to launder these funds, and two-
thirds included nonoperating companies like the ones this law 
targets.
    Small businesses overwhelmingly support the need for the 
CTA. More than three-quarters of small businesses expressed 
support in 2018 for legislation requiring businesses to divulge 
their beneficial owners' true identities at the time of 
formation, and 84 percent of small business owners said the use 
of anonymous companies to win contracts or obtain government 
funding was a problem.
    Under the CTA, FinCEN began accepting electronic filings of 
beneficial ownership information on January 1st. But despite 
its critical importance, too many small businesses remain 
unaware of their reporting obligation.
    More must be done to communicate with small businesses 
about these requirements, and I am interested in learning how 
we can help do that here this morning--but that is not a good 
reason to demonize this law, fear monger about regulatory 
impact, or cut funding for such a crucial national security 
agency.
    That said, for most affected entities reporting should be 
relatively simple. The reporting page on the FinCEN website is 
easy to use, makes use of dropdown menus, and only requires 
relatively basic information that most small business owners 
either already know or have readily accessible, such as tax and 
personal identification numbers, legal names, and addresses.
    Given that the majority of the 32 million small businesses 
affected as sole proprietors finding this information should be 
quick and easy. According to a recent survey, 68 percent of 
small business owners that have already filed indicated the 
process was easy.
    I want to thank the witnesses for their willingness to 
testify today, and I yield back. Thank you.
    Mr. MEUSER. The gentlelady yields.
    I will now introduce our witnesses. The first witness here 
with us today is Ms. Carol Roth. Ms. Roth is a small business 
owner and has extensive experience and expertise in related 
small business matters. Ms. Roth has been a judge on the series 
America's Greatest Makers on TBS and the host of Microsoft's 
Office Small Business Academy show, as well as a panelist on 
FOX Business' Bulls & Bears and CNBC's Closing Bell.
    Ms. Roth has written three books with her most recent book, 
``You Will Own Nothing,'' becoming a New York Times bestseller. 
She also regularly writes for a number of online publications 
including op-eds for FOX News and FOX Business. Ms. Roth has 
been named a top 100 small business influencer by Small 
Business Trends multiple times. She earned her Bachelor of 
Science in finance and management from the Wharton School of 
Business at the University of Pennsylvania. Thank you for 
joining us today.
    Our next witness here with us is Mr. Roger Harris. Mr. 
Harris is the president of Padget Business Services located in 
Athens, Georgia. Mr. Harris has served as president of Padget 
Business Services since 1992, offering services to thousands of 
small business owners ranging from government compliance to tax 
advice through hundreds of individually owned locations. Prior 
to serving as president, Mr. Harris served as President and 
Chairman of the Board in one of the largest franchises in the 
system.
    He was a panelist on President Bush's Advisory Panel on 
federal Tax Reform and served as Chair of the Internal Revenue 
Service Advisory Council.
    Mr. Harris earned his degree in accounting and finance from 
the University of Georgia, J.M. Tull School of Accounting. So, 
Mr. Harris, we certainly look forward to your testimony as 
well.
    Our next witness with us today is Mr. Timothy Opsitnick. 
Mr. Opsitnick is the executive vice president and general 
counsel of Technology Concepts & Designs, Inc., located in 
Cleveland, Ohio, which provides a comprehensive suite of 
services including digital forensics and cybersecurity.
    Mr. Opsitnick previously founded JURINNOV, Ltd., which 
provides the legal and business communities with innovative 
solutions to address their data security needs. He also 
recently served as Chairman of the Council on Small Business 
Enterprises.
    Mr. Opsitnick earned his Bachelor of Arts in political 
science and psychology from Ohio--how do we pronounce that--
Wesleyan--I should know that--University before earning his JD 
from Case Western Reserve University School of Law. Thank you 
for joining us here today.
    And I now recognize Ranking Member from New York, Ms. 
Velazquez, to briefly introduce our last witness appearing 
before us today.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. Our final witness 
today is Mr. Gary Kalman. Mr. Kalman is the Executive Director 
of Transparency International U.S. and oversees the 
organization's U.S. operation focusing on illicit finance and 
the U.S. role in global anti-corruption efforts.
    He was a founding member of the Financial Accountability 
and Corporate Transparency Coalition where he served as its 
Executive Director from 2016 to 2019. He was also a founder of 
Americans for Financial Reform, a coalition that in the 
aftermath of the 2008 financial crisis led the successful fight 
for the Dodd-Frank Financial Reform bill.
    He is currently an advisory counsel for the International 
Coalition Against Illicit Economies, and he is a top advocate 
for anti-corruption and transparency issues.
    Thank you, Mr. Kalman, for joining us. We look forward to 
your testimony.
    Thank you, Mr. Chairman.
    Mr. MEUSER. Thank you.
    Now, before recognizing the witnesses I do need to remind 
you all that your oral testimony is restricted to 5 minutes in 
length. If you see the light turn red in front of you it means 
your 5 minutes have concluded and you should wrap up your 
testimony.
    I do now recognize Ms. Roth for your 5-minute opening 
remarks.

    STATEMENTS OF CAROL ROTH, SMALL BUSINESS EXPERT  AND
      OWNER; ROGER HARRIS, PRESIDENT, PADGETT; TIMOTHY M. 
      OPSITNICK,  EXECUTIVE  VICE PRESIDENT  AND  GENERAL 
      COUNSEL,  TECHNOLOGY  CONCEPTS & DESIGN, INC.,; AND 
      GARY  KALMAN,  EXECUTIVE   DIRECTOR,   TRANSPARENCY 
      INTERNATIONAL US

        STATEMENT OF CAROL ROTH, SMALL BUSINESS EXPERT AND 
                             OWNER

    Ms. ROTH. Good morning. I am Carol Roth, a small business 
expert and a small business owner myself. On behalf of small 
businesses across the United States I am asking that you, our 
bipartisan advocates for small business, immediately overturn 
the Corporate Transparency Act's beneficial ownership 
information rule passed by Congress which unfairly targets 
American small businesses.
    The Constitution of the United States protects the natural 
rights of all Americans, including against federal government 
overreach. While preventing financial crimes is a worthwhile 
endeavor, your methods cannot do so in a way that infringes 
upon Americans' natural rights or assumes that they are guilty 
without due process.
    Asking small businesses and their owners to report 
sensitive personal information and identification to an 
organization involved in monitoring financial crimes, 
unfortunately, does just that. It is not only an invasion of 
privacy but it also creates additional burdens and challenges 
for small business owners.
    And once again, by exempting big businesses from this 
reporting rule, it specifically and unfairly targets and 
penalizes small business owners with a different standard and 
set of rules.
    Small businesses overall are not shell companies. They are 
the backbone of the economy. If FinCEN has concerns about money 
laundering, cartel activity, or otherwise, they should be using 
the courts to receive information on those specific cases and 
entities.
    I imagine you would agree that it is highly unlikely that 
those who would engage in such cartel or money laundering 
activities would be forthcoming with the information that 
FinCEN is seeking. Given that, the rule is ineffective, that 
is, cartels and money launderers won't be swayed to 
participate, while also unconstitutionally penalizing law-
abiding Americans and infringing on their rights. If there is a 
concern about foreign entities, well, then the rule should 
focus on them exclusively.
    Moreover, the penalties, which include significant 
financial and criminal penalties including jail time, are 
egregious. Plus the rule exposes small business owners to fraud 
and privacy violations. In fact, the very first alert on the 
FinCEN BOI landing page, right in the center of the website, is 
an alert about fraudulent information solicitation attempts 
from third parties.
    Creating this type of database, in addition to the privacy 
violations from hackers and unsavory parties, also creates 
concerns for abuse internally. FinCEN itself has come under 
fire for its alleged unjustified data usage.
    In a time when small business owners have been brutalized 
by unfair, slanted COVID mandates and their aftereffects, such 
as labor shortages and supply chain interruptions, historic 
inflation, and other challenges, the last thing they need is 
more administrative burden both in the original reporting and 
remembering that any time a piece of data changes they need to 
provide an update or they face jail time.
    I personally have had dozens of small business owners tell 
me they are considering dissolving their LLCs to become sole 
proprietors without an entity specifically in response to this 
rule. This will expose these entrepreneurs to more liabilities 
and other issues because they are trying to escape being 
targeted.
    This cannot be how we treat entrepreneurs. Being a small 
business owner is fraught with challenges. The government 
should be doing everything possible to uplift small businesses 
and remove barriers that interfere with their success.
    Instead, with the powers granted to FinCEN and this rule, 
Congress has added another barrier and is treating small 
businesses like criminal masterminds. The ends absolutely do 
not justify the means here.
    But the most important piece is the rule's 
unconstitutionality. A federal District Court in Alabama has 
already found the CTA BOI rule directed at small business 
reporting to be unconstitutional. Unfortunately, based on the 
ruling scope, FinCEN is choosing to ignore this for everyone 
but the plaintiffs in that case, a peculiar outcome. If it is 
unconstitutional, it is unconstitutional period and should be 
immediately shut down.
    FinCEN has many tools at their disposal and a court system 
to help their efforts on financial crimes. They should use 
those tools and not harm a good portion of America's more than 
33 million small businesses and their owners in the process.
    Good intentions don't always produce good outcomes, and 
this is a perfect example. Congress put this in motion and 
needs to be the one to fix it.
    Again, I respectfully ask you to work with your 
counterparts in the Senate to have Congress immediately 
overturn the powers given to FinCEN and the CTA BOI rule. Thank 
you for your time and consideration.
    Mr. MEUSER. Thank you very much.
    I now recognize Mr. Harris for his 5-minute opening 
remarks.

       STATEMENT OF ROGER HARRIS, PRESIDENT, PADGET 
                    BUSINESS SERVICES

    Mr. HARRIS. Thank you and good morning, Mr. Chairman and 
Ranking Member and Members of the House Small Business 
Committee. My name is Roger Harris, and I represent a company 
called Padget who has provided accounting, tax, and advisory 
services to small businesses for almost 60 years.
    And our definition of our target client is a client with 
fewer than 20 employees so normally when we see legislation, 
first thing we do is we look for the small business exception. 
However, when we looked at the Corporate Transparency Act we 
found not only was there no small business exception our 
clients were the target of the legislation.
    So that means we had to react to the requirement and try to 
find a way to service our clients because our firm and firms 
like ours are the primary advisors to small businesses with 
fewer than 20 employees so they would turn to us and expect us 
to be the firm to help them comply with this.
    Unfortunately, as we dug into it and as we talked to our 
legal advisors and our insurance carriers, we were being told 
to stay away from providing this service, that we were 
potentially going to face great risk as a firm if we provided 
these services to our customers. Now, why? What were some of 
the reasons we were given that we should stay away from this?
    Number one is the amount of the penalties which are severe 
and could be assessed not only on the business owner but on us. 
We lack the guidance and examples of certain things, like 
substantial control and most recently willful behavior in terms 
of assessing the penalty. What is considered willful behavior?
    There were other issues. There is a 30-day timeframe to 
turn around certain things within the law. None of us have 
relationships with small businesses that allow us to react in 
30-day cycles so that presented a problem.
    And just generally speaking we were just being told do not 
do this. Do not do this. And yet, knowing that our clients were 
dependent upon us, we started to say we have to find a way so 
we started working with groups like AICPA, the National 
Association of Enrolled Agents and other accounting 
associations.
    We came up to DC and met with many of your staffs to look 
for ways to try to make this work. We actually had meetings 
with FinCEN and tried to find a way to see if there was any way 
to, number one, create more awareness because if our clients 
did not hear it from us they had no idea that this rule or law 
was ever in existence.
    And if we could not serve them we were going to be faced, I 
believe, with massive noncompliance in the small business 
community. And if the noncompliance is not going to be because 
these businesses are laundering money. It is because they are 
not filing a form. So we need to find a way if we are going to 
have this rule to make it work.
    So we think that there are some common sense things that we 
can do to see if we can make this work. Number one, I want to 
endorse the suggestion that AICPA made, which was because of 
the legal result in Alabama to put implementation on hold 
until, first of all, that that lawsuit is settled, and then 
give us an additional 12 months after that to try to find fixes 
to see if we can make this work.
    We also need to really look at the 30-day requirement. It 
is just not practical for most things. Personally, I would 
rather not have a 30-day requirement at all, but if we are 
going to have to have 30 days would like to see something as 
simple as your driver's license renewing to start a clock 
ticking for noncompliance.
    We need changes in third party certification to fit more 
like what we do when we prepare someone's tax return. Right now 
we are being asked to take a stronger position legally on the 
beneficial owner than we do on that same business' tax return.
    And next I think the IRS has worked with us to support 
small businesses for years, and I think FinCEN could learn some 
things on how they communicate, how they issue guidance, how 
they issue examples to our group so we can assist this in the 
small business community.
    So I think the summary of what I am saying today is that 
this isn't going to work as it is currently structured. It is 
going to cause massive noncompliance in the small business 
community. And again, I will remind you that is not because 
they are laundering money. It is because they didn't file a 
form.
    So I am hoping that you can help us in making what we think 
are reasonable changes to allow us to do our job and get the 
compliance that I think was anticipated when the bill was 
passed.
    Thank you for holding this hearing. Thank you for allowing 
us to be here today, and I look forward to your questions.
    Mr. MEUSER. Thank you very much.
    I now recognize Mr. Opsitnick for your 5-minute opening 
remarks.

    STATEMENT   OF   TIMOTHY   OPSITNICK,  EXECUTIVE   VICE 
      PRESIDENT   AND  GENERAL  COUNSEL,  TECHNOLOGY   CON-
      CEPTS & DESIGN, INC., AND NATIONAL SMALL BUSINESS AD-
      MINISTRATION

    Mr. OPSITNICK. Thank you, Mr. Chairman. Mr. Chairman, 
Members of the Committee, Ranking Member Velazquez, thank you 
for holding today's hearing on the implementation of the 
Corporate Transparency Act.
    My name is Tim Opsitnick and I am the part owner of several 
small businesses, including Opsitnick, LLC, OnCall Cyber, Ltd., 
and serve on the boards for several nonprofits and small 
businesses. I am also the executive vice president of TCDI, a 
business focused on legal services, computer forensics, and 
cybersecurity.
    I am grateful to be here today on behalf of the National 
Small Business Association testifying on an issue that is truly 
critical to the entire small business community.
    Before I begin, I would like to address the elephant in the 
room. As you may know, the NSBA is involved in active 
litigation over the constitutionality of the CTA. I am not here 
to address that case but rather to speak to some of the 
specific impacts that the law has had on small businesses that 
I work with and to shed light on the experiences that 
entrepreneurs and main street business leaders face in the 
current regulatory environment.
    I am active in small business groups and chambers at the 
federal, state, and local level. Through these groups and my 
advisory work, I have made connections with small business 
owners across industries, locations, and sizes from 
multigenerational family businesses to first-time entrepreneurs 
working out of their apartments.
    In my experience, first-timers are much more fragile. With 
every minute and every dollar critical to survival they can 
least afford to spend significant time and money on compliance 
and have the least awareness of complicated federal 
regulations, yet, paradoxically, are the first to be implicated 
and impacted by the CTA.
    As of January 1, any non-exempt new entity must report its 
beneficial owners to FinCEN within 90 days of formation. This 
places the first reporting burden on fledgling entrepreneurs 
who are least prepared to comply. Moreover, the regulations are 
unclear even when simplified for the public. Specifically I 
would like to draw your attention to FinCEN's 57-page Small 
Entity Compliance Guide, as well as the 45-page FAQ.
    A first-time entrepreneur looking to open a coffee shop, 
for example, must push through 102 pages of explanatory 
language to understand the reporting burden. Given permitting 
and other delays, it is entirely possible that our aspiring 
barista would have to act on all of this before a single cup of 
coffee was served to a customer, all under the threat of 
criminal sanctions.
    Compounding problems like the government's limited 
outreach, the lack of clarity, and strong liability concern, 
small businesses also face a dearth of expert advisers able and 
willing to interpret the regulation or to help them file.
    Secretary Yellen said that FinCEN is making reporting as 
easy as possible. A small business shouldn't need a certified 
accountant or lawyer. As a small business owner and as a 
lawyer, I completely disagree.
    For example, in determining who must be a beneficial owner 
the filer must determine not only who is an owner but must list 
those with substantial control over the business. Lawyers do 
not understand the meaning of substantial control, let alone 
the barista I mentioned. The term would make for good law 
school discussion.
    As to the financial burdens, a recent NSBA survey revealed 
that the small business owners are anticipating average 
compliance costs of nearly $8,000 in the first year.
    Nearly half also intend to rely on outside advice from 
multiple professionals. Worryingly, even lawyers and 
accountants are woefully unprepared. Attorney list serves are 
alight with conversations about what to advise clients. The 
typical advice that I see is wait to the last minute.
    As I mentioned, part of my work includes cybersecurity and 
data privacy. Let me stress we do not know that this database 
is secure. We further know that the information or access to 
the database will be shared.
    Every time an owner shares their information the risk that 
it will be misused or lost to the dark web significantly 
increases. FinCEN's own website opens with an alert about 
fraudulent solicitations under the CTA.
    According to NSBA research, the average cost to remedy a 
small business data breach is $15,297. These figures could 
cripple small businesses who are cash-strapped and cash flow-
sensitive.
    Small business leaders cannot afford to be vulnerable. The 
majority of small business leaders that suffer a breach will be 
out of business within 6 months.
    In conclusion, I would like to reiterate the small business 
community's thanks to the committee for their attention to 
these issues, and I very much look forward to answering 
questions.
    Mr. MEUSER. And outside of that it is wonderful, correct? 
No, I am kidding.
    Now, Mr. Kalman, we give you your 5 minutes to make your 
opening remarks.

        STATEMENT OF GARY KALMAN, EXECUTIVE DIRECTOR, 
              TRANSPARENCY INTERNATIONAL U.S.

    Mr. KALMAN. Chairman Meuser, Ranking Member Velazquez, and 
Members of the Committee, on behalf of Transparency 
International U.S. I appreciate the opportunity to discuss the 
progress towards the implementation of the Corporate 
Transparency Act. Transparency International is part of the 
world's largest and oldest coalition fighting corruption.
    The CTA's historic anti-money laundering measure that 
Congress correctly understood would strengthen the ability of 
law enforcement and the U.S. national security community to 
curtail the use of anonymous entities to commit crimes.
    Moreover, the CTA's reporting requirements are neither 
unusual nor unprecedented for everyday Americans. Most states 
collect more information when granting public library cards 
than is required under the CTA.
    And the CTA benefits small business owners by among other 
things protecting them from unfair and fraudulent competition 
while imposing minimal compliance costs. The law passed with 
broad bipartisan support in Congress and has seen strong vocal 
support from both the Trump and Biden administrations. In the 
lead up to passage, Congress gathered a litany of evidence of 
the harms caused by anonymous shell companies.
    In the 2018 Money Laundering Risk Assessment, the Treasury 
Department wrote that drug crime and associated financial flows 
has changed with the rise of China as a supplier of fentanyl 
and its analogs, noting that the U.S. Drug Enforcement Agency 
has determined that, ``Goods are being exported to China by 
U.S. front companies as payment for drugs.''
    In 2020, the U.S. Department of Justice went after millions 
derived from a nearly 20-year-long scheme to evade U.S. 
sanctions on Iran by laundering more than $300 million through 
more than 70 front companies in California and other 
jurisdictions. These and similar reports are why more than a 
hundred national security experts ultimately signed a letter to 
Congress calling for legislation that would require the 
collection of beneficial ownership information.
    Congress also heard evidence demonstrating how anonymous 
companies are used to undermine our markets and disrupt 
legitimate business. Anonymous companies were used to sell 
knockoff products to the Pentagon and used to import and sell 
counterfeit medicines from India and China. Likewise, patent 
trolls and fraudsters have abused anonymous companies to target 
small businesses.
    Given the potential for harm, it is not surprising that in 
multiple polls small business owners felt that the benefits of 
the CTA's reporting requirements outweighed the cost. There 
were two independent polls, one in 2018, as mentioned by the 
Ranking Member, and another in 2019. Both found that roughly 
three-quarters of small business owners supported beneficial 
ownership disclosure requirements and support was consistent 
across party lines.
    Support for ending the incorporation of anonymous companies 
now includes a diverse set of business trade associations, 
including the U.S. Chamber of Commerce, law enforcement 
agencies, faith-based organizations, and scholars from both 
conservative and liberal-leaning think tanks among many, many 
others.
    Likewise, the Trump administration encouraged congressional 
passage of the CTA. In its statement of administrative policy 
it said, ``This legislation will help prevent malign actors 
from leveraging anonymity to exploit these entities for 
criminal gain.''
    And the Biden administration echoed that support in its 
U.S. strategy and countering corruption stating that, ``We will 
address these deficiencies in the U.S. anti-money laundering 
regime by effectively collecting beneficial ownership 
information.''
    The CTA requires simple reporting to mitigate these 
national security and public safety threats. According to the 
Small Business Administration, approximately 82 percent of all 
businesses in the U.S. are non-employer firms, meaning that 
there is only one person in the enterprise. True small business 
owners will not have trouble identifying the owner of their 
business. It is, therefore, misleading to suggest that many 
reporting companies will have difficulty or costly processes in 
identifying their beneficial owners.
    From a practical standpoint it seems improbable for a 
business to have the resources to pay for the creation of a 
complex structure but not be able to name who sits at the top 
of the corporate food chain.
    FinCEN's rollout of the database was successful. Already 
more than a million businesses have filed. In fact, a post-
rollout poll found that among those small businesses that had 
filed 68 percent reported it being somewhat or very easy to 
comply. Only 6 percent found it very difficult.
    If Congress is concerned about the lack of awareness of the 
law, I would urge Members of this committee to support 
increased funding for FinCEN. There is bipartisan support for 
an increase to provide additional outreach on the CTA and other 
implementation costs to ease compliance.
    Thank you and I look forward to your questions.
    Mr. MEUSER. All right, thank you. We will now begin our 
line of questioning, and I am going to begin with myself and 
allow myself my 5 minutes of questioning.
    So, look, since taking office the Biden administration has 
instituted many regulations, many new taxes on energy and small 
business, and it has not been business-friendly. In fact, it 
has weakened small businesses.
    So this FinCEN approach to beneficial ownership rule I 
don't think we believe needs to be completely rescinded, but my 
first question here will go to you, Ms. Roth, but there aren't 
many small businesses that are embracing it and can handle it, 
understand it. And the rollout has been tumultuous, has been a 
problem.
    The number that you just had brought up, Mr. Kalman, on, 
what, you said 6 percent, well, I find that challenging to 
believe, frankly, but data is data. But we will begin our 
questioning.
    So, Ms. Roth, has FinCEN reached out to small businesses? 
Have they adequately reached out to let people know what the 
potential fines were, what the compliance is, why this is even 
being done in the first place?
    Ms. ROTH. Not that I am aware of and certainly not with the 
small business owners that I have spoken with. For my written 
statement for the record that I submitted, I brought with me 
almost 450 statements from small business owners across this 
country who are vehemently opposed. Most of them when I brought 
it up to them either through the media or other ways that they 
have come in contact with me, had never heard of it.
    They also have no idea who FinCEN is. You know, I am a 
recovering investment banker so I am familiar with, you know, 
the Financial Crimes Enforcement Network, but for your average 
small business owner they are just trying to stay afloat. They 
are not familiar with that division of the Treasury.
    And when they find out, they are saying why is it that the 
Financial Crimes Enforcement Division of the Treasury is asking 
for my information?
    So the communication certainly hasn't been there and as 
small businesses find out more about it the reaction isn't 
usually, oh, well, this sounds like a great thing. It is 
horror, and that is why I was able to bring so many statements 
to bear.
    Mr. MEUSER. Of those you surveyed for this, the 450 
statements against and having problems with it, can you share 
with us how many said it is okay, I am handling it, I think it 
is a good idea?
    Ms. ROTH. None.
    Mr. MEUSER. Zero?
    Ms. ROTH. Zero.
    Mr. MEUSER. Okay. So what percentage is that? You went to 
Wharton.
    Ms. ROTH. Zero.
    Mr. MEUSER. Yeah, okay. Zero again, not zero, right for it.
    So okay. So, Mr. Harris, let me ask you, please. Explain 
the accounting industry's problem and lack of comfort assisting 
small businesses to comply with this rule.
    Mr. HARRIS. Like I mentioned in my statement, there are 
just so much unknowns and risks that are potentially assigned 
to us, which if we have to go forward with no additional 
guidance, we are going to have to charge more for this service 
than I think is fair for the small business owner to have to 
incur because risk is something we have to factor into how we 
charge.
    So if we could get some cooperation. You know, there are 
some things that seem simple. I know I mentioned I have been to 
two FinCEN meetings. I have asked them for a definition--not a 
definition, but guidance on the role of a spouse and whether a 
spouse who you go home and talk to every night about your 
business could be deemed to have substantial control, even 
though they own nothing in the business?
    And we got a non-answer, and that is where we have risk. We 
need guidance. There are all kinds of--in the tax code the 
spouses are addressed many times in terms of their role and the 
attribution rules and all these sorts of things. So we are just 
asking for the same guidance that we have everywhere else.
    Without that we are going to be unable to provide the help 
that these businesses are going to need. And I can tell you if 
we don't help they are not going to do it.
    Mr. MEUSER. Thank you.
    Mr. Opsitnick, what can be improved on the FinCEN rule in 
order to make you more comfortable with it?
    Mr. OPSITNICK. Well, we are not comfortable with it at all, 
which is the reason for our court challenge. We don't think 
that this is the way at all. We, you know, we don't see any 
improvement that is possible.
    We are certainly willing to engage in conversation and we 
haven't been given that opportunity to engage in conversation. 
You know, this is kind of where I get a little bit frustrated. 
We are very happy to have the opportunity right now to talk 
about the Corporate Transparency Act, but we weren't given that 
opportunity before. And, in fact, it was a 21-page rider 
attached to a 1,500-page National Defense Authorization Act 
bill where it was passed.
    There was no prior discussion of it before. We didn't have 
the time to discuss possible ways to improve it. It was just 
passed as a rider.
    And, you know, when we consider that that is impacting 33 
million small businesses and 60 million employees----
    Mr. MEUSER. Clearly heavy-handed government on----
    Mr. OPSITNICK.--that--yes.
    Mr. MEUSER.--on our small business backbone of our economy. 
I thank you very much, and I yield back.
    And now I recognize the Ranking Member for her 5-minute 
remarks.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    The regulatory environment under this administration is 
such, right, that has impacted so many small businesses I don't 
know how that reconciles with the fact that 10 million small 
businesses started since Joe Biden took office. Something 
doesn't click here.
    Mr. Kalman, the CTA took over 10 years to pass and you met 
with a number of staff and Members, correct? What were the key 
issues that brought Democrats and Republicans together that led 
to this law passage?
    Mr. KALMAN. Thank you for the question. There were a number 
of issues, I think, that brought a wide variety of 
constituencies. In fact, anonymous companies have been used for 
so many different crimes that is why you had the variety so 
national security, fentanyl trafficking, human trafficking, 
counterfeit and pirated goods, fraud in government contracting, 
and more.
    Ms. VELAZQUEZ. Can you comment on the unique array of 
organizations and interests which made up the coalition of 
stakeholders that fought for this law?
    Mr. KALMAN. Sure. In my written testimony I listed a number 
of the different constituencies that ranged, cops, sheriffs, 
local prosecutors, Republican and Democratic attorneys general, 
anti-human trafficking organizations, human rights 
organizations, and the whole gamut.
    Ms. VELAZQUEZ. Why we are so many different interests 
aligned on this path?
    Mr. KALMAN. They saw, and I would also point out the law 
enforcement support, of the value of the information that they 
believe this would be helpful in stopping the kinds of crimes 
that we have been talking about.
    Ms. VELAZQUEZ. FinCEN began accepting beneficial ownership 
information on reporting companies on January 1, 2024. There 
are penalties for willful failure or deception in reporting. 
Why is the inclusion of the word willful so important and how 
does it impact small business owners?
    Mr. KALMAN. So there are different standards for 
culpability in different laws and negligence is amongst the 
lowest. Willful is amongst the highest, so the notion that if 
you don't know about the law and don't file it is incorrect to 
suggest that that is rules for prosecution. You have to know 
about the law and decide not to file.
    Ms. VELAZQUEZ. What happens if a small business owner 
accidentally makes a mistake on their submission to FinCEN?
    Mr. KALMAN. They are not liable. They are not guilty of 
violating the law.
    Ms. VELAZQUEZ. Mr. Kalman, under the law reporting 
companies must provide the beneficial owners' full legal name, 
date of birth--it is this form here, right--current address, 
and unique identifying number from an identification card. Can 
you give us an example of when a legitimate business would be 
incapable of providing this information?
    Mr. KALMAN. We actually, in the 12 years of debate over 
this law, people put out some hypotheticals but no one actually 
came forth with a company that wouldn't. I would also point out 
that Members created in the law a FINCEN identifier for those 
parent companies that for some reason, legitimate or not, 
didn't want their subsidiaries to know who they were, they 
could use an identifier to continue that anonymity.
    Ms. VELAZQUEZ. Companies are required to report updates to 
the information on file within 30 days of change. Some claim 
that this will subject reporting companies to harsh penalties 
if they forget to update their information. Is that true?
    Mr. KALMAN. If you forget again to file that is not a 
violation under the law.
    Ms. VELAZQUEZ. Mr. Harris, do you think it would be helpful 
for Secretary of States to provide a link to FinCEN's database 
when small businesses register their businesses?
    Mr. HARRIS. Well, it probably wouldn't hurt, but they are 
still going to reach out to firms like us and say what does 
this mean? Because as I think I said in my written testimony, a 
small business owner gets into business to do the one thing 
they love and the 99 things that they hate, and this ranks up 
there with the top of the 99. So they are just going to reach 
out to us and say what does this mean, what does it do?
    I mean, it couldn't hurt, but I am not sure it is a----
    Ms. VELAZQUEZ. But you don't think this will help small 
businesses know about the need to register?
    Mr. HARRIS. It has got to create some awareness.
    Ms. VELAZQUEZ. Right.
    Mr. HARRIS. Right.
    Ms. VELAZQUEZ. I think that there is a role for different 
federal agencies and for FinCEN to understand that they have to 
bring in other federal agencies such as the Small Business 
Administration----
    Mr. HARRIS. They should.
    Ms. VELAZQUEZ.--the partners out there, small business 
B2Cs, to help educate businesses that they must comply with 
this regulation.
    Thank you, Mr. Chairman. I yield back.
    Mr. MEUSER. The Ranking Member yields back.
    I now recognize Representative Luetkemeyer from Missouri 
for 5 minutes.
    Mr. LEUTKEMEYER. Thank you, Mr. Chairman.
    I am an interesting guy to have on the committee here this 
morning because I was a sponsor, the Republican sponsor, of the 
Corporate Transparency Act. And as much as I hate that bill and 
hate that rule, my intention on that was to make sure we 
minimize the effect of this bill or this rule because it 
originally was a horrendous thing.
    But because of my involvement we were able to trim it down 
and, in fact, you only had four things you were supposed to do 
and you were supposed to be able to do on a postcard. Guess 
what?
    The administration continues to do what they always do, 
which is misinterpret what is going on, misconstrue, and now we 
have got over 50 different requirements that they are supposed 
to comply with. They have totally taking a law and just torn it 
up and start all over again.
    In our discussions with FinCEN they say what we need to do 
is target those businesses under $5 million in revenue. There 
is nothing like that in the bill.
    They don't need this. I agree with Ms. Roth and all of you. 
They don't need this. They are tools in their toolbox right now 
to go to the court and find out and get their warrants they 
need to be able to go investigate. What they have done is 
weaponized the financial services industry and make them 
deputies in their law enforcement activities, which is wrong in 
my mind.
    But, again, the intention was to try and minimize what went 
on and I think we did that in the course of what we were trying 
to do here. However, they have taken the law again and done it 
completely different.
    So let's go back with the cost of this originally as to 
what is going to be. I know we had Director Gacki from the 
Financial Services Committee a while back, and she stated that 
accounts will not be subject to criminal litigation for filing 
this information. Is that the way you read that, Mr. Harris?
    Mr. HARRIS. Well, I certainly hope so, but I think, again, 
it is going to depend on certain definitions of what is 
willful. I mean, are we willful? I wish FinCEN was as good in 
offering the definitions as Mr. Kalman was about what is 
willful because we have asked for that guidance and we have not 
been given clear guidance on willful.
    So I mean, I am not sure anybody is out to penalize small 
businesses just for the sake of penalizing them, but as long as 
that threat hangs over them and firms like us we are going to 
have to be cautious in how we move forward. That is the best I 
can do.
    Mr. LEUTKEMEYER. Yes. We argued long and hard over the 
words willful, as Ms. Vazquez talked about, and substantial 
which I think Mr. Opsitnick mentioned a minute ago. We have 
argued long and hard over those and trying to find some 
definitions.
    Never did really come up with some good ones that actually 
work. But I know that it is very frustrating for all of us to 
sit here and put something on our small businesses.
    Now, I think, Mr. Opsitnick, I think you made a comment. I 
think you talked about an average of, like, $8,000 per small 
business it would cost. The American Action Network says it is 
going to cost about $2.2 billion in total to comply with. Where 
do you get your figures from and how do you come up with that?
    Mr. OPSITNICK. Our figures came from a survey that we took 
from our membership. Our memberships reported themselves what 
they expected the cost to be to them. If you would like, I can 
go through a little bit more----
    Mr. LEUTKEMEYER. Yeah, no.
    Mr. OPSITNICK.--about what the process might be and why 
those numbers might be so much higher.
    Mr. LEUTKEMEYER. Yes, well, go ahead. Just go into it a 
little bit.
    Mr. OPSITNICK. Yes. So, I mean, let's think about the 
process. I mean, in this process, first of all when you 
consider their time, the impacts of their time, first they are 
going to have to read 102 pages of guidance. They are going to 
have to review the website for all these other things. They are 
going to have to talk to their attorneys, their accountants, 
other consultants.
    They are going to have to determine do they fall with any 
of the exceptions. And most importantly for business owners, 
they are going to talk with their peers because, frankly, we 
get our best advice typically from our peers. They are going to 
have to determine who is a business owner with substantial 
control, which is incredibly vague.
    And then they are going to have to gather the information 
of the information and then they are going to have to input it. 
And all of that while being distracted from generating revenue 
of their current business.
    Mr. LEUTKEMEYER. Thank you. You know, Ms. Roth, I agree 
with you wholeheartedly. I hate this rule. I fought it from the 
very beginning and once it got implemented we were trying to 
figure out how to make it minimally impactful on our folks. And 
instead we find out what this complex law now is with playing a 
game of gotcha. It is basically what the administration is 
doing here with this because we had it kind of refined down to, 
I think, something that everybody could probably live with: a 
postcard with four questions on it that reveal your name, 
address, Social Security number, and ownership. I mean, that 
should be pretty simple. But now they have turned it into this 
monstrosity.
    How would you see us--what would you recommend for us to do 
to change this thing to make it, short of getting it out, you 
know, getting rid of it altogether, how can we make it less 
intrusive?
    Ms. ROTH. Well, I think that, you know, when we are talking 
about costs and making it less intrusive one of the key costs 
we are not talking about is risk. And that is the risk that 
this information gets in the wrong hands. That is the risk that 
they are going to get enormous fines, that somebody is going to 
say, oh, you willfully forgot this for a year and now all of a 
sudden you owe $215,000 or jail time.
    There is an asymmetric risk problem going on here and that 
is the number one biggest cost of this right now.
    Mr. LEUTKEMEYER. Okay, thank you, and I would yield back.
    Mr. MEUSER. The gentlemen's time has expired.
    We now recognize Representative McGarvey from Kentucky for 
5 minutes.
    Mr. MCGARVEY. Thank you, Mr. Chairman. I appreciate that.
    And I just want to open up with a few statements that I 
hope are not controversial. We should crack down on bad guys 
who use shell companies to commit crimes. It is not 
unreasonable to have small businesses provide some identifying 
information to the government when dealing with them.
    And small business owners in my district in Louisville, 
Kentucky, accountants, Mr. Harris, shouldn't have to call my 
office in tears because they haven't gotten guidance from 
FinCEN on how to comply with BOI reporting requirements and 
they think they are going to jail.
    So I think we should frame this conversation in that sort 
of way where we are trying to make sure that the bad guys 
aren't doing bad things, that small businesses have what they 
need, and they can comply.
    And I think it is obvious FinCEN's rollout must be better. 
My staff has taken those calls from accountants, from small 
businesses, from people who honestly they think they are going 
to end up in jail because of CTA. FinCEN and Treasury need to 
do a much better job in educating and communicating over the 
next year, but I think we can help with that, too.
    And people who are just outright opposed to anything can 
abandon some of the fear mongering that is causing this sort of 
reaction from my constituents, so I want to ask a few 
questions. I will start with Mr. Kalman. The penalties under 
the Corporate Transparency Act only target individuals who 
willfully provide false or incomplete information to FinCEN, 
correct?
    Mr. KALMAN. Correct.
    Mr. MCGARVEY. Okay. And then how can FinCEN--because this 
is the Small Business Committee we want to make sure that that 
small businesses have what they want, the stories are real. How 
can FinCEN coordinate with the SBA to ensure an adequate 
rollout to help these small businesses comply with these 
regulations?
    Mr. KALMAN. Thank you for the question, and I think that is 
actually the most productive thing we can talk about so I 
appreciate you raising it.
    You know, FinCEN does have some ability and, in fact, in 
two days I am going to be on a webinar with some small 
businesses to talk with FinCEN to talk about implementation of 
the law and to help them with compliance.
    But I think the number one thing that Members of this 
committee could do is to join with their colleagues in asking 
for more money for FinCEN specifically for implementation and 
education of the constituency of small businesses. There is an 
awful lot that can be done. FinCEN doesn't currently have the 
resources.
    Mr. MCGARVEY. Mr. Harris, I want to ask a question of you 
as well. In your testimony you said you have no problem with 
the goals of CTA but you do believe that the current 
implementation of the BOI reporting requirements without 
adjustments lead to mass noncompliance. I would ask sort of the 
same question to you. Is there a role here for the SBA and 
FinCEN to coordinate to get an adequate rollout for these small 
businesses to comply with the regulations?
    Mr. HARRIS. Well, I think there is a role for everybody 
because clearly there is massive lack of awareness, 
understanding. So I think we need to--if we are going to go 
forward with this then we need to utilize all the tools that we 
have to, number one, educate the small businesses of the 
requirement, to address some of the concerns that both they and 
firms like ours feel because I am not an expert in crimes, 
certainly not in money laundering, so I have to defer to others 
on whether this is an effective way to combat those types of 
activities.
    But I do know that this is not an effective rollout of a 
way to combat those activities. So I think it is going to take 
everybody working together to try to find a way to make this 
work if we are going to go forward with it.
    Mr. MCGARVEY. Thank you. I appreciate that.
    Mr. Kalman, I will come back to you. We know FinCEN was 
subject to a great deal of criticism for how they have educated 
affected businesses during implementation, and I think with 
good reason. Has the outreach and education effort--has the 
outreach improved? Have the education efforts improved since 
the law has gone into effect, if you know?
    Mr. KALMAN. I think there has been a step up in webinars 
and outreach. I think the biggest thing that FinCEN is doing is 
trying to work with secretaries of state across the country and 
with the IRS. These are places where small businesses just have 
interactions and so those are touch points where I think they 
can make a lot of difference. And I think they are stepping up 
those efforts, yes.
    Mr. MCGARVEY. Mr. Harris, I will ask you the same question 
in the 20 seconds we have got left.
    Mr. HARRIS. Everything helps. You know, like I said, I just 
come back to the fact that at this point we need to channel all 
of our resources to see if there is any way to make this work.
    I would ask each of you to go back to your home districts 
and ask a business owner if they have ever heard of it. I think 
they will say no. If they say yes they probably heard it from a 
firm like ours, so we have got a lot of work to do.
    Mr. MCGARVEY. Thank you. I know it wasn't fair for me to 
say 20 seconds answer how to fix this, but that is what we had.
    Mr. Chairman, I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative Maloy from the great state 
of Utah for 5 minutes.
    Ms. MALOY. Thank you, Mr. Chairman.
    Mr. Harris, I was going to start with a different question 
but I am going to answer your question first. So I have been in 
Congress for 5 months and I have had several calls from 
businesses in Utah where I represent about this, and they are 
really nervous about their ability to comply and some of the 
small businesses that have called me have been accounting 
businesses.
    Mr. HARRIS. Sure.
    Ms. MALOY. I share your concerns. In fact, the first week I 
was in Congress I got a call about this and I went and talked 
to Mr. Luetkemeyer on the floor and so this is something I have 
been looking at the entire time I have been here.
    And there is discomfort and disquiet out there in the small 
business community that they are going to get in trouble for 
trying to comply with something they can't understand, which is 
government at its worst, that we are up here talking about 
intentions.
    You know, this was intended to stop money laundering. This 
was intended to be simple, but our intentions don't really 
matter if the result is disruption to the small business 
community. So we should be able to do better than that.
    And to that point, Ms. Roth, you talked about asymmetric 
risk problem in your last answer. Do you want to take a minute 
and just unpack that a little bit for all of us?
    Ms. ROTH. Sure. I am going to actually read from one of the 
almost 450 small business owners who have proposed this. This 
is a gentleman by the name of David Stiles, who is a 
consultant. He said he will ``close his doors rather than 
expose himself to the asymmetrical risk of exposure of personal 
information and the potential to be prosecuted if the 
government deems I have completed my documents incorrectly. 
Given the complexities and ambiguities of the CTA's BOI rule, I 
view the risks and consequences of running afoul of compliance 
to be unacceptably high. Engaging professional help to complete 
the required documentation would turn my consultancy into a 
money loser.''
    Ms. MALOY. Thank you. That was a even better answer than I 
anticipated. And the reason we are doing this is because we are 
trying to stop money laundering. I am going to open this 
question up to everyone on the panel. Is anyone aware of any 
money laundering businesses that have actually been picked up 
with this?
    Ms. ROTH. No, and I think that is sort of the fundamental 
issue with what we are talking about here if we want to prevent 
financial crimes. Does anyone actually think that a money 
launderer or cartel is going to be the one that reports?
    And we have other tools. We have suspicious activity 
reports. We have the courts. So we should be focusing on those 
rules and not penalizing small businesses as a way to go after 
money launderers and cartels.
    Ms. MALOY. Mr. Harris?
    Mr. HARRIS. I am not aware of anyone, but I do the best I 
can to stay away from people who launder money.
    Ms. MALOY. So do I.
    Mr. Opsitnick?
    Mr. OPSITNICK. I am certainly not aware of anyone, and I 
couldn't agree more with Ms. Roth. I mean, this is exactly what 
it is about. The people who are evil are going to manipulate 
the system. They are not going to comply. We are going to 
comply because we follow the rules.
    Ms. MALOY. Or you are going to try to comply.
    Mr. OPSITNICK. We are going to do our best.
    Ms. MALOY. Mr. Kalman?
    Mr. KALMAN. I would say the law has been in effect for a 
few months and people are just starting to file so it wouldn't 
be surprising if there are no cases.
    I would point out, however, that many of these directories 
are very similar throughout Europe and the U.K. and have been 
in place for several years and, yes, they have actually yielded 
a number of cases. And we are happy to supply examples if that 
is helpful.
    Ms. MALOY. Well, recognizing that this is fairly new it 
just feels like a good old-fashioned dragnet operation, which 
we don't do in this country, because the tradeoff of violating 
rights in exchange for stopping crimes is just not something 
that we are willing to tolerate.
    Mr. Opsitnick, you talked about how lawyers can't 
understand the terms and they are not sure how to define them. 
My background is in the law and definitions really matter as an 
attorney. It is risky to advise a client to do something if you 
are not sure where the line is to get them, you know, the line 
that will cause them legal problems and you are in the middle 
of a lawsuit over this very problem.
    I just want to go back to this definition of willful. If 
the highest penalties are someone who willfully refuses to 
comply, what is the risk to a business that is that is 
attempting but doesn't understand what the terms mean?
    Mr. OPSITNICK. You know, what I worry about most is not the 
scienter or the, you know, degree of culpability that is 
engaged in the definition of willful. What I worry about is the 
impact on a small business that is actually being charged and 
has to then go through the process to prove that they, in fact, 
did not do something willfully.
    You know, the amount of money would be devastating to their 
business. It would put them out of business. You can't even 
imagine the amount of effort it would take to fight the 
government if they come and tell you you willfully failed to 
comply.
    Ms. MALOY. I am going to cut you off because I only have a 
few more seconds, but what we talk about a lot on this 
committee is removing burdens from small businesses, 
streamlining processes, making it easier for small businesses, 
and it feels like this is the opposite of that.
    And with that, Mr. Chair, I yield back.
    Chairman WILLIAMS. The gentlelady yields back.
    I now recognize Mr. Thanedar from the great state of 
Michigan for 5 minutes.
    Mr. THANEDAR. Thank you. Thank you, Mr. Chair, and good 
morning to all of you. Thank you for being here.
    My question is for Mr. Kalman. It is crucial to acknowledge 
the significance of safeguarding the information collected 
under the Corporate Transparency Act. This legislation marks a 
critical step in combating transnational crime and corruption 
by requiring the disclosure of beneficial ownership 
information; however, with such sensitive data being collected 
ensuring robust security measures is paramount.
    Mr. Kalman, could you elaborate on the security mechanisms 
in place to safeguard the information collected under the CTA, 
particularly concerning access to the database by law 
enforcement, national security, and financial services 
professionals?
    Mr. KALMAN. Sure, and thank you for the question. I think 
over the course of the debate there were concerns about 
security and so the security concerns that FinCEN is now 
required to put in place--not everybody in law enforcement has 
access to the database.
    You have to be certified. You have to go through a 
training. You have to go through a background check. When you 
log on every logon is tracked and, therefore, there is an audit 
of that and it can be traced.
    You have to say that there is an existing investigation. 
And there are penalties which are actually, I think, stronger 
for leaking the information than there are for not reporting. 
And so appropriate security measures, recognizing some of those 
concerns, were negotiated and included in the law.
    Mr. THANEDAR. All right. Thank you, Mr. Kalman.
    And, Mr. Chair, I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative Stauber from the great state 
of Minnesota for 5 minutes.
    Mr. STAUBER. Thank you, Mr. Chair and Ranking Member 
Velazquez, for holding this hearing. And thank you to all the 
witnesses for being here today and taking time out of your busy 
schedule to shed light on this topic.
    Over 700 regulations have been added to the Federal 
Register costing nearly $440 billion since Joe Biden took 
office and FinCEN's recent beneficial ownership information 
rule is yet another regulatory burden placed on American small 
business owners by this administration. It is clear the Biden 
administration's priorities aren't with the men and women who 
own small businesses.
    Forcing the collection of personal data from millions of 
small businesses opens them up to potential data breaches and 
fraud. FinCEN hasn't helped provide much clarity on reporting 
at this moment either.
    Mr. Opsitnick, many small businesses are unaware that this 
reporting obligation is pending. Can you please talk about the 
potential consequence of noncompliance with the BOI rule?
    Mr. OPSITNICK. Well, the consequence is devastating to a 
small business to think that you could go to jail for two years 
for failing to comply or that you would, you know, get civil 
penalties as well. It would be devastating.
    And my own experience is that there is simply nobody is 
aware of this. And in the boards that I am on who would have 
some responsibilities, the nonprofits, you know, my local 
sportsman's club, my homeowners' association, these issues have 
never been raised.
    I have never received letters from my small businesses from 
FinCEN. The only reason I am aware is because I happen to be a 
past Chair of the local Chamber of Commerce where we, you know, 
we are very much involved in these issues. So my awareness is 
because I am active.
    Mr. STAUBER. Yes. Thank you very much.
    Mr. Kalman, on your company's website Transparency 
International outlines their ``solution on beneficial ownership 
transparency by saying countries should create centralized 
public registers of beneficial ownership with verified 
information on who ultimately owns or controls these 
structures. These would allow everyone to see who is hiding 
behind anonymous companies and trusts.''
    Do you believe Americans should lose their right to privacy 
simply for opening a business?
    Mr. KALMAN. My organization does believe, as they have in 
Europe and throughout the U.K., that the names behind companies 
have been extremely helpful in deterring corruption and, 
therefore, have supported public registries, yes.
    Mr. STAUBER. Do you believe Americans should lose their 
right to privacy simply for opening a business?
    Mr. KALMAN. As I said, I think the value of the 
information----
    Mr. STAUBER. Mr. Kalman, I just have a little bit of time. 
As executive director of Transparency International do you 
believe your home address should be publicized?
    Mr. KALMAN. I believe that not all the information, because 
if you are going to get to driver's license and all of that, 
that is not made public, by the way, in any of the registries 
as far as I am aware.
    Mr. STAUBER. Mr. Kalman, I do----
    Mr. KALMAN. And so there----
    Mr. STAUBER. Yes, excuse me, just with the limited time, I 
know a filibuster when I see one. Should other Americans not 
have a right to register a business without publicizing their 
home addresses?
    Mr. KALMAN. It is the business address I believe that is 
actually required.
    Mr. STAUBER. That is right. So you don't believe they 
should be required to publicize their home address?
    Mr. KALMAN. If that is the business address then it is the 
business address.
    Mr. STAUBER. And have you owned a small business?
    Mr. KALMAN. Yes.
    Mr. STAUBER. Explain please.
    Mr. KALMAN. I had a small consultancy where I helped 
nonprofits with some of their fundraising and administrative 
efforts back when I lived in Philadelphia.
    Mr. STAUBER. The Transparency International, how many 
employees?
    Mr. KALMAN. Transparency International U.S.?
    Mr. STAUBER. Yes.
    Mr. KALMAN. We currently have 5 full-time employees, sorry.
    Mr. STAUBER. So you consider it a small business, right?
    Mr. KALMAN. A small nonprofit, yes.
    Mr. STAUBER. So I will tell you, my brothers and I owned a 
small business for 31 years. What you are hearing from the 
other witnesses is exactly what we have heard from other small 
business owners across this country ever since I have been on 
this committee. I am in my sixth year. Stop the overburdened 
rules and regulations that are stifling our local economy and 
our local small businesses.
    I think you are--I do believe you are a good person. I just 
want you to recognize the struggles that the men and women in 
this country involving small businesses and the rules and 
regulations, the overburdensome that you are putting on these 
American small businessmen and women.
    And I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative Van Duyne from the great 
state of Texas for 5 minutes.
    Ms. VAN DUYNE. Thank you very much, Mr. Chairman.
    Once again the Biden administration has rolled out a 
regulatory framework failing to recognize the impact on small 
businesses. By increasing the regulatory burden once again to 
countless small businesses, this administration chose to ignore 
the warnings and failed at implementing the Corporate 
Transparency Act in a pro-growth manner.
    With this week also National Small Business Week, I was 
glad to see this Committee passed my bill, the Small Business 
Regulatory Reduction Act. This bill requires the Small Business 
Administration to ensure for each fiscal year the cost to small 
businesses of the administration's rulemaking is not greater 
than zero, and it also requires the SBA to issue a report on 
any regulations issued by other federal agencies that impact 
small businesses.
    I look forward to seeing this bill on the floor and working 
with this committee to ensure that Congress is reining in the 
power of an out-of-control regulatory gluttonous executive 
branch.
    I am on another Committee that is meeting at the same time, 
Ways and Means, and we have Secretary Yellen in front of our 
Committee today. Now, I am going to have an opportunity, just 
like I am with you, to ask her some questions. I am going to go 
down the line. If you were in my position and you could ask 
Secretary Yellen any question what would it be?
    Ms. ROTH. Oh, Lord, you asked the wrong person that. You 
know, I think that aside from small business the fiscal 
foundation of this country is on an unsustainable fiscal path 
and what the government is doing is fighting against the work 
of the federal reserve. So I would ask her why they are 
fighting against the Fed and how they are going to make sure 
that we have a strong fiscal foundation.
    Ms. VAN DUYNE. Great question.
    Mr. Harris?
    Mr. HARRIS. I think I would ask her if she is believing 
that this bill is necessary and needs to work why isn't she 
working more closely with companies like ours and people in our 
profession and the small business community to make sure that 
it does, in fact, work?
    Ms. VAN DUYNE. Good question.
    Mr. OPSITNICK. I would like to ask, you know, what makes 
America great? I mean, we are the innovators. We kick butt. We 
kick the world's butt. We don't want to be like Europe.
    I have had the occasion to, you know, to try to set up a 
corporation in the U.K. It takes weeks or months. Why would we 
want to be like that?
    We want to be someone who is quick and easy. I can do it in 
a day today. I can get an EIN number and I can file my 
corporation with the state of Ohio. Why would I want to be like 
somebody else? It stifles innovation. Why would we do something 
that stifles innovation?
    Ms. VAN DUYNE. On that now you are getting me on our tax 
cuts and JOBS Act extensions as well. You are getting me all 
fired up before I go to this hearing.
    Mr. KALMAN. I think the thrust of this hearing is trying to 
figure out how to make this work for small businesses, and I 
would ask Secretary Yellen what does she need? What does the 
Treasury Department, what does FinCEN need to actually make 
sure that small businesses can ease their compliance or their 
resource constraints or what do they need----
    Ms. VAN DUYNE. But the----
    Mr. KALMAN.--to make this happen?
    Ms. VAN DUYNE. But honestly that is always--always we need 
more money. I am sorry but that is a copout and we can make 
government work smarter. We could look at the regulations that 
they are wasting time right now hiring people to do that are 
not helping, that are crushing small businesses. That is the 
answer. It is not, oh, we just need to hire more people. People 
are sick of it.
    To Ms. Roth's point, we are at a fiscal cliff right now. To 
think that just throwing more money at this problem is going to 
help, we are crushing our economic sector because what we are 
doing is throwing more government taxpayer dollars into it.
    It is not sustainable. These aren't private jobs. This is 
not private sector growth. What we are seeing right now is just 
being propped up by government spending that we are going to be 
working to pay off for decades, lifetimes to come.
    When we are adding a trillion dollars every hundred days to 
our debt the last thing that I am going to ask a cabinet 
secretary is, hey, can we give you more money?
    We all know what this that answer is going to be. And it is 
really a sad commentary that that is always our go to. We need 
to be able to clean up, make sure that the regulatory burdens 
that we are putting on actually do something.
    Are they decreasing costs? Are they increasing safety? Are 
they increasing efficiency? Does it do anything other than add 
more bureaucrats, more cost, more time, and more boxes that our 
businesses have to check and do nothing else but make us less 
competitive around the world?
    So I would hope that more thoughtfulness would go into that 
type of a question than do you need more resources. And thank 
you very much for your answers, and I yield.
    Chairman WILLIAMS. The gentlelady yields back.
    I now recognize Representative Alford from the great state 
of Missouri for 5 minutes.
    Mr. ALFORD. Thank you, Mr. Chair. And thank you, Chairman 
Williams and Ranking Member Velazquez, for holding this 
hearing.
    Congress passed the bipartisan Corporate Transparency Act, 
or CTA, in 2020, tasked FinCEN with creating rules to reduce 
the use of companies to obscure criminal behavior and detect 
funds used for crime and terrorism. FinCEN was tasked with this 
job because of their expertise in investigating financial 
crimes.
    A result of this rulemaking, though, is the beneficial 
ownership information, or BOI rule. It requires businesses with 
20 or fewer employees to disclose beneficial owners of those 
who have at least a 25 percent stake in a company or those who 
have substantial control over a company's operations.
    This vague rule has caused chaos in America's small 
businesses, those least able to absorb the compliance burden 
that this place is upon them. A specific problem is FinCEN's 
definition of individuals that exercise control over a company. 
Several legal and accounting service providers have indicated 
that they will not offer assistance to clients in complying 
with this rule.
    Substantial fines of up to $10,000 and potential jail time 
are punishable for willful noncompliance, and as we have heard, 
we don't have a definition of willful. Despite the issues 
raised with FinCEN, they have gone ahead with this rule which 
was implemented in January of this year.
    I want to start with you, Mr. Harris. Just last week a 
Member of my staff told me that a constituent reached out to 
our office asking for help with BOI, calling a congressional 
office needing help with their BOI compliance.
    Your company has worked with tens of thousands of small 
businesses over the decade that your company has existed. When 
you talk with clients do they have an understanding of the 
requirements of this, what it is, what they need to do in this 
coming year?
    Mr. HARRIS. No, Congressman, they do not unless we tell 
them. Again, they are not following this. This is not what they 
got in business to do so if they have anywhere--we have gone on 
education campaign to inform them of this requirement as it 
currently exists.
    But as I think someone mentioned earlier we are not doing 
anything with that today in hopes that we get some changes 
between now and the end of the year so that we can take on this 
our role and assist our clients. We want to help them comply 
but for right now we haven't found a way that we can make that 
happen that is affordable to them. And after hearing somebody 
is going to pay $8,000, I am reconsidering my hesitancy to do 
this, but----
    Mr. ALFORD. Sir, do you know how many LLCs there are in the 
United States of America?
    Mr. HARRIS. Well, no, but a lot.
    Mr. ALFORD. I did a little research. As of 2021, there are 
21.6 million limited liability corporations in America, each 
subject to these new regulations. Many of those are dormant 
LLCs, mom-and-pops, entrepreneurs whose thought, hey, I may 
start up a little business, maybe an Etsy business, something 
online, and I need a little protection so I am going to have 
it. And now they are subject to a potential $10,000 fine. What 
do you make of that?
    Mr. HARRIS. Well, I think a $10,000 fine is going to scare 
everybody away. I think one of the--I asked FinCEN a question. 
I said what if a business closes? What do we do to take them 
out of the database and they said ``nothing.''
    So one of the concerns I have is 10 years from now how 
accurate is that database with businesses that have closed are 
still in it, businesses who have grown outside of it they are 
still going to be in this database, so how are we going to know 
who is still active and who is inactive?
    But I can tell you that the fear of a $10,000 fine makes it 
very hard for anyone to swallow.
    Mr. ALFORD. Ms. Roth, I want to ask you a question. I do 
want to read your book, ``You Will Own Nothing,'' because I 
have dealt with this in real estate. I think that people are 
moving, you know, they want to turn into a renter nation. Do 
you think this is part of a larger scheme this type of 
overregulation to tamp down small businesses so we won't have 
the entrepreneur spirit and the capitalism that we have so 
enjoyed all these years?
    Ms. ROTH. So I will speak on behalf of small businesses 
because this is what they have been telling me. This has been a 
constant barrage since COVID-slanted mandates that were not 
based on data and science, but were based on political clout 
and connections.
    They had a different set of standards and a different set 
of rules they had to play by. They were absolutely crushed 
then. They have been crushed by the aftereffects.
    And so when you see something like this and they say, oh, 
it is about corporate transparency and they say, well, why are 
the big businesses exempt then? If you want corporate they are 
the ones that have the means to launder money. I can't even pay 
my bills.
    That is what they are worried about. They are worried about 
this consolidation, this cronyism, and that we are absolutely 
crushing the backbone of this country.
    Mr. ALFORD. Thank you. I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize myself for 5 minutes.
    Certain industries are going to be hit harder than others 
when complying with these rules coming out of FinCEN, and just 
this week I was speaking with some people in the land and title 
industry. And on top of the concerns they have with the 
Corporate Treasury Act and the beneficial ownership rule they 
said is another rule coming down the pipeline that will be even 
more costly for their businesses.
    And according to their estimates, this new rule in the 
pipeline will add an additional $500, we have talked about 
that, per transaction on top of what is already required by 
FinCEN. So this is just another example of compounding costs of 
regulations hammering small businesses, and when Congress 
updated the Corporate Treasury Act the intent was not to burden 
our nation's job creators with costly new reporting 
requirements.
    So, Mr. Harris, do you have any estimations on the overall 
cost of complying with this rule? And how could FinCEN make the 
process easier for small business to comply?
    Mr. HARRIS. That is what we are still trying to determine 
is what is our cost and risk is a big part of making that 
assessment. I mean, yes, you can fill the form out in 15 
minutes, but what all had to go into it prior to that 15 
minutes from legal and risk assessment?
    That is what we are trying to assess because we don't want 
to make this a burden on our small business clients because 
most of them are just honest, good-working, hard-working 
people. They have no problem doing this as long as it can be 
done quickly and affordably.
    So I don't have an answer today. It is too much right now 
for us to be willing to do, but we are trying to get there.
    Chairman WILLIAMS. Ms. Roth, in your testimony you said 
that while preventing financial crimes is a worthwhile 
endeavor, exempting big businesses from the beneficial 
ownership reporting rule unfairly targets and penalizes small 
business owners. So why do you believe that a different set of 
standards and rules are being applied to small businesses and 
not to big business?
    Ms. ROTH. Excuse me. It is a big point of frustration with 
the small business owners. It is all across the board. If you 
have a sole proprietorship, you are exempt. If you have an 
entity, you are not exempt.
    So we have small business owners who are saying, well, 
although I like the protections of having an LLC, I am just 
going to dissolve that because I don't want to be targeted. And 
then they don't understand, okay, well, I get to, you know, $5 
million in revenue and 20 employees and then those people are 
exempt.
    So what is it about these, you know, small businesses that 
make up the chunk of the small businesses in this country, the 
almost 33 million small businesses in this country, that that 
particular group of people should be targeted, but the big 
businesses don't have to do this? And sole proprietors don't 
have to do it. It does feel like there is something weird going 
on.
    Chairman WILLIAMS. It is called government talk.
    Ms. ROTH. Yeah.
    Chairman WILLIAMS. Yeah.
    Mr. Opsitnick, in preparation for this hearing you 
indicated receiving compliance guidance from FinCEN on this 
rule was difficult. Can you please describe the issues you have 
had getting charity, or clarity, rather, from FinCEN and how 
that will impact the services that you offer?
    Mr. OPSITNICK. Well, the clarity really is the--you know, 
we have taken a small act and continue to pile on. And as I 
mentioned in my testimony, we have 102 pages which include the 
FinCEN Small Entity Compliance Guide and Frequently Asked 
Questions, and then that together with an entire website 
devoted to all of this.
    It is overwhelming for a small business owner, even for 
those who are unaware. Contrast that currently with the 
requirements that somebody has with the federal government in 
starting a new business which is to get a taxpayer ID number. 
It is a two-page document, the application and a set of 
instructions.
    That is our sole obligation today with respect to the 
federal government. So this, you know, there couldn't be a more 
darker contrast.
    Chairman WILLIAMS. Let me tell you, I am from Texas, and we 
take the right to privacy very seriously, like we all do, and 
the more information we have out there the more likely a bad 
actor is going to gain access. And, unfortunately, the 
implementation of this rule asked for more information than is 
needed to comply with the law.
    So briefly, Ms. Roth, in the time remaining, how could we 
better strike the balance between a business privacy and 
national security concerns?
    Ms. ROTH. Well, I believe that most small business owners 
think that if you need to reach them that there is a way that 
the government already can reach them through the IRS or some 
other point of contact.
    In terms of FinCEN, they have things like suspicious 
activity reports and, of course, the courts that if they have a 
specific entity where they need the beneficial ownership 
information they should go to the courts, petition them, and 
get that information.
    But having a database of everybody who is involved with a 
small business owner seems like a very heavy-handed way to try 
to approach and solve that issue.
    Chairman WILLIAMS. Thank you. All right. I want to thank 
all of you for being here today. I am sorry. I was involved in 
talking about--this is Small Business Week this week, so we are 
promoting it. And I appreciate my colleague, Congressman 
Meuser, for sitting in, and I appreciate the Ranking Member 
today.
    This has been a great hearing. I appreciate you all being 
here and thank you a lot for taking time to come up here.
    And without objection, Members have 5 legislative days to 
submit additional materials and written questions for the 
witnesses to the Chair which will be forwarded to the 
witnesses. I ask the witnesses to please comply promptly if you 
are involved in that.
    And if there is no further business, without objection, the 
committee is adjourned.
    [Whereupon, at 11:26 a.m., the committee was adjourned.] 







    
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