FinCEN Director Andrea Gacki Assures Small Businesses on Beneficial Ownership Reporting Requirements

FinCEN (Financial Crimes Enforcement Network) Director Andrea Gacki has reassured small businesses that the new beneficial ownership reporting requirements are designed to catch criminals, not to act as a "gotcha" trap for companies. Speaking at a community outreach event in Tucson, Arizona, Gacki emphasized that the corporate filing requirements under the Corporate Transparency Act (CTA) would not impose a significant burden on small firms.

"Small business owners doing their best to comply with the law should not lose sleep over these new reporting requirements," Gacki stated. "The CTA penalises willful violations of the law, and this is where we plan to focus our enforcement actions. It’s not a 'gotcha' exercise."

Gacki's comments come in response to pushback from some small businesses regarding the CTA, which mandates that most companies report information about the individuals who ultimately own or control them. The National Federation of Independent Businesses (NFIB) has filed a lawsuit challenging the CTA, arguing that it would "improperly compel speech and burdens associations unconstitutionally compel disclosure of private information."

Beth Milito, Executive Director of NFIB’s small business legal centre, expressed concern that small businesses "are at risk of being subjected to civil and criminal penalties for simple paperwork violations."

In an effort to calm these fears, Gacki reiterated that small firms were considered at "every step of implementing this law." She explained, "We’ve considered small business owners and the potential burden that any regulation might impose on their day-to-day operations. Filing a report is easy and free of charge, and for companies with simple ownership structures, we estimate that it should take about 20 minutes."

Gacki added, "The majority of companies that are required to file should be able to complete the process without the help of an attorney or accountant. And it’s not an annual requirement: unless you need to update or correct information, beneficial ownership reporting is a one-time filing."

Highlighting the importance of the CTA, Gacki pointed out that many criminals use complex ownership structures and networks of shell companies to conduct illicit activities, which significantly hampers law enforcement investigations. "Beneficial ownership information reporting can make these types of investigations more efficient by providing a direct resource for law enforcement, national security, and intelligence officials," she said. "It can give law enforcement an advantage over illicit actors, diminish the head start that corporate anonymity provides, and ultimately level the playing field for legitimate American businesses."

Gacki concluded with a stern warning to those the CTA aims to target. "The illicit actors that the CTA targets – criminals, money launderers, terrorist financiers and others looking to manipulate America’s corporate system to hide their identities—should lose sleep over this law."

For small firms incorporated before the start of 2024, the CTA reporting deadline is set for 1 January 2025. However, Gacki encouraged businesses not to delay. "But we encourage you not to wait. The database is live and ready when you are," she said.

By fLEXI tEAM