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McHenry Questions FinCEN Funding Amid Beneficial Ownership Debate

FinCEN

A top House Republican says the White House’s new beneficial ownership rules are needlessly complex.

U.S. Rep. Patrick McHenry, (R-N.C.), head of the House Financial Services Committee, questioned the new reporting requirements during a hearing on Wednesday (Feb. 14).

Under the new rules, many businesses are required to provide the government with beneficial ownership information, or “identifying information about the individuals who directly or indirectly own or control a company,” as the Financial Crimes Enforcement Network (FinCEN) puts it.

During the hearing, McHenry discussed the beneficial ownership rule’s roots as part of the Corporate Transparency Act.

He argued that under the current administration that act has gotten too complex, saying the original law required four pieces of information from people reporting as beneficial owners, a number that has jumped to 51 data points.

“We were told that the beneficial ownership reporting regime would be the silver bullet FinCEN needed to catch and deter bad actors,” McHenry said. “Yet even after enactment, we have been inundated with never-ending requests for new authorities and more money.”

Meanwhile, Rep. Maxine Waters, a California Democrat and her party’s ranking member on the committee, applauded the administration for cracking down on financial crime.

“Republicans don’t want you to know that it was the Treasury that brought the criminal crypto exchange Binance and its executives to justice with a $4.3 billion settlement,” she said, per a report Wednesday by Axios.

FinCEN, a division of the U.S. Department of the Treasury, first announced the new rules in 2022, saying they would block criminals from using anonymous shell companies to mask their illegal income.

“For too long, it has been far too easy for criminals, Russian oligarchs and other bad actors to fund their illicit activity by hiding and moving money through anonymous shell companies and other corporate structures right here in the United States,” said acting FinCEN Director Himamauli Das in a news release at the time. “This final rule is a significant step forward in our efforts to support national security, intelligence and law enforcement agencies in their work to curb illicit activities.”

The law exempts some businesses from filing. Included in that group are those that file reports with the Securities and Exchange Commission (SEC), as well as governmental authorities, banks, credit unions, money services businesses, investment advisors, securities brokers and dealers, and insurance companies.