WASHINGTON — A House of Representatives hearing on rules to force banks to determine who owns assets they hold presented an opportunity for legislators to air concerns they've voiced before. This time, the complaints were aimed at the Financial Crimes Enforcement Network's newly-appointed
Lawmakers from both sides of the aisle reiterated concerns over Fincen's proposed rules during a hearing held by the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions Tuesday. Both parties hope Gacki will heed their suggestions for easing law enforcement access to the beneficial ownership database and reducing compliance burdens for banks.
"I'm hopeful [Gacki's appointment] marks a turning point for the agency," said House Financial Services Committee Chairman Patrick McHenry (R-N.C.). "I look forward to working with incoming director Gacki to address our concerns and members of this subcommittee in coordination with administration."
Congressman Blaine Luetkemeyer, (R-Mo.) — chairman of the National Security Subcommittee — reiterated a number of concerns he has repeatedly voiced this year. He's particularly concerned that, as proposed, Fincen's beneficial ownership
"Fincen and Treasury have transformed a simple filing system into a complex maze, leaving many scratching their heads," he said. "I don't see how Fincen can move forward with a January 1 effective date without a clear plan."
Luetkemeyer co-authored
Some Democrats like Congresswoman Joyce Beatty (D-Ohio) agreed on the need for Fincen to make revisions, stressing the importance of efficiently implementing the law while minimizing the burden on affected industries. She said that Fincen's current proposal places onerous rules on how law enforcement may access the database, which could lock them out of effectively utilizing the information. She says the utility of the registry is diminished if the authorities can't promptly act on sensitive information.
"I agree with you, Mr. Chairman, that today's hearing is an important discussion about certain flaws in Fincen beneficial ownership rulemaking that deviate from the intent of Congress… [like] proposals to greatly restrict access to the BOI database, which would render new rules practically useless," Beatty said.
Another major issue was the so-called "escape hatch" lawmakers think Fincen may have created with Treasury's recent draft questionnaire. The form allowed companies to report their ownership as "unknown," potentially enabling anonymous firms to avoid the reporting system. Democrats and Republicans in the House and Senate previously
"The loopholes in the draft filing form [undermine] the effectiveness of the law," said Beatty.
Fincen's then-Acting Director Himamauli Das had announced the questionnaire would be rewritten, clarifying that the "unknown" checkbox does not exempt companies from reporting obligations.
Pete Selenke, vice president and anti-money laundering/bank secrecy act officer at Central Bank, who represented the American Bankers Association at the hearing, said that while the industry supported the Corporate Transparency Act, banks want to see changes to the rules including allowing more flexibility in the usage of beneficial ownership information to support broader compliance requirements.
"Limiting banks' ability to utilize this information for customer due-diligence compliance only, rather than broader anti-money laundering compliance, is inconsistent with congressional intent and will increase burdens," said Selenke.
The parties disagreed on agency funding, however. Democrats like Representative Wiley Nickel (D-N.C.) argued that in order for Fincen to improve its proposed rules, it needs proper funding, especially if it decides to validate the information in the database.
"With fewer resources Fincen will have a harder time supporting such national security and law enforcement inquiries while moving forward on structural reform to strengthen the US financial system against illicit funds," said Nickel.
