WASHINGTON — Himamauli Das, acting director of the Treasury Department's Financial Crimes Enforcement Network, told lawmakers Thursday that his agency is considering how and whether to verify entries in a beneficial ownership database, but may be limited in what it can do.
"We heard loud and clear the importance of validation and we agree with the importance of validation," Das told a House Financial Services Committee panel during
Das' comments come as Republican lawmakers, some of the loudest critics of Fincen's beneficial ownership "access" rule, voiced ongoing concern with Fincen's implementation of a 2020 money laundering law — the Corporate Transparency Act — that requires banks to disclose the true owners of shell companies.
Chairman U.S. Rep. Blaine Luetkemeyer, R-Mo., said Fincen's proposed beneficial ownership database "access" rule has major flaws, and he said that in violation of congressional intent, the rule would place the onus for data reporting on institutions rather than the agency itself.
"The Corporate Transparency Act was created to be a strategic tool to target bad actors abusing our financial system, while simultaneously reducing the regulatory burden on both small businesses and regulated entities," he said. "Fincen's proposed beneficial ownership rule fails to reduce the burden for financial institutions by forcing them to collect information that the law clearly states Fincen should be collecting."
Das said there are limitations to how much of that burden Fincen can relieve.
"We are working through a number of considerations with respect to legal constraints, our ability to access other databases as well — whether they be public databases or commercial databases — that will allow us to validate this information in an effective and fluid way," he said. "These are issues that are front and center for us along with the cost considerations of validation and verification."
Das clarified that his agency is listening to feedback from the public, and that they would continue working hard to accomplish three particular goals before the new rules go into effect.
"First we're carefully reviewing public comments so that we can finalize the regulatory framework and the forms needed to report beneficial ownership information. Second, we are designing and building the IT framework so that we can ensure a secure and confidential database," he noted. "Third and most importantly, we're reaching out to stakeholders, small business groups and state agencies, and at the same time working on guidance so that we can ensure that small businesses, many of whom may never have heard of Fincen, understand their obligations so that reporting beneficial ownership is as streamlined and as straightforward as possible."
Echoing
Director Das said he takes these concerns seriously, that his agency is seriously looking at ways to validate the information and will consider changes to the proposed rule within the legal and regulatory constraints.
The beneficial ownership "access" rule
Thursday's hearing comes just weeks after a bipartisan group of senators wrote
This is the second rule of three Fincen will propose under the Corporate Transparency Act, or CTA, enacted in January 2021. Congress directed Fincen, a bureau of the Treasury, to compile beneficial ownership information, or BOI, of certain U.S. and foreign reporting companies in a Beneficial Ownership Secure System. This rule covers access and safeguarding of BOI required to be submitted to Fincen. The registry is set to be operational by January 1, 2024.
