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Lawmakers Seek Delay on Beneficial Ownership Rules Affecting Small Businesses

A group of Republican lawmakers wants the government to delay new small business reporting requirements.

Starting Jan. 1, many businesses will be 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) put it.

However, the group of lawmakers — made up of 80 members of the U.S. House and Senate — asked FinCEN to extend that deadline, arguing in a letter published Wednesday (Dec. 20) that the agency is “woefully behind” in educating small business owners about the new rules.

“This lack of awareness and education is alarming and must be addressed before the law is implemented,” wrote the lawmakers, led by House Financial Services Committee Chair Patrick McHenry of North Carolina. “Dozens of organizations, representing millions of small businesses operating in every state and community across the country, have already publicly expressed their strong support for delaying implementation of the beneficial ownership information (BOI) reporting requirements by one year.”

The delay, the lawmakers said, would give FinCEN and the business community more time to educate owners about their new obligations, while also providing FinCEN with additional time to review the new rules and improve and finalize the regulatory framework.

PYMNTS contacted FinCEN for comment but did not receive a reply.

FinCEN, a division of the U.S. Department of the Treasury, first announced the new rules last year, saying they would prevent criminals from using anonymous shell companies to conceal 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.”

Some businesses are exempt from the rule, including those that file reports with the Securities and Exchange Commission (SEC), governmental authorities, banks, credit unions, money services businesses, investment advisors, securities brokers and dealers, and insurance companies.