Despite delays, beneficial ownership bill will move forward: Maloney

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WASHINGTON — After a vote on a House bill aimed at restricting anonymous shell companies was postponed at a markup last week, the legislation’s lead Democratic co-sponsor said the House Financial Services Committee will not delay the bill beyond the next markup.

Rep. Carolyn Maloney, D-N.Y., told reporters Tuesday that her bill to require companies to disclose their beneficial owners at the time of incorporation could be considered by the committee as early as the end of June, though the committee’s next markup has not yet been scheduled.

The committee “will not push it back any further,” Maloney said.

Ranking Member Patrick McHenry, R-N.C., who had raised concerns about the provision at a markup last week, "legitimately wants more information," Maloney added. "He’s entitled to get it. We will all work to get the information to him that he requested," and Chairwoman Maxine Waters "made it very clear that this bill would be marked up.”

McHenry said at the recent committee markup that he did not have enough information from law enforcement to determine its benefits and warned that it would be overly burdensome for small businesses, leading Maloney to request a vote be postponed.

The legislation is largely supported by the banking industry, because it would free financial institutions from regulatory requirements to collect beneficial ownership information of their account holders. Law enforcement has also supported it as a tool to combat illicit finance.

But some Republicans and small-business groups have sounded alarms that the legislation poses unnecessary regulatory burdens. And the American Bar Association last week wrote a letter opposing the legislation, saying that it would be expensive and potentially risky for lawyers who help companies form.

“The new federal regulatory regime created by the bill, combined with the broad and confusing definition of beneficial owner, would be costly, impose onerous burdens on legitimate businesses and their lawyers, and subject them to harsh civil and criminal penalties if they fail to comply,” Rober Carlson, the bar association's president, wrote in the May 6 letter to the committee.

The bill would exempt companies with a physical presence in the U.S. with more than 20 employees and $5 million in gross receipts or sales from the reporting requirements, because "companies that employ this many people and that have legitimate, business-related income are very unlikely to be anonymous shell companies that were created to hide or launder illicit funds," according to a press release from Maloney's office.

Despite McHenry’s concerns, Maloney said she believes the legislation will have strong bipartisan support in the House. Other senior Republicans on the committee, including Reps. Ann Wagner, R-Mo., and Blaine Luetkemeyer, R-Mo., have indicated they will support the bill.

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AML KYC Patrick McHenry House Financial Services Committee American Bar Association