To reduce the risk of small businesses supporting terrorism or drug trafficking, a pair of bills in Congress would require all small businesses to identify their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury. The House of Representatives passed The Corporate Transparency Act of 2019 (H.R. 2513) last October with bipartisan support (and bipartisan opposition). Pending before the Senate – with bipartisan sponsorship – is the ILLICIT CASH Act (S. 2563). If the Senate passes the ILLICIT CASH Act, then a conference committee composed of both Congressional branches could meet to present a final version of a bill to be passed by both branches.
The two pieces of legislation each mandate direct small businesses – corporations and limited liability companies – to provide the full names, addresses, birthdays, and passport or drivers license numbers of each of their beneficial owners to FinCEN every year. The bills would also require the attorneys who file original articles of incorporation/organization to provide this information about themselves, even if they are not beneficial owners. No state – including Ohio – requires small business corporations and limited liability companies to disclose such information about their beneficial owners. Each bill would apply exclusively to small businesses because both bills would exempt businesses that have more than 20 full-time employees and have more than $5,000,000 in gross receipts or sales. Both bills include privacy protections to the information that small businesses would be required to provide to FinCEN.
There are legislative hurdles before small businesses would have these reporting requirements. If Congress passes a law that imposes these reporting requirements and the President signs it, the law will most likely have a different name than the two pieces of legislation identified above.
This law has not been passed as of the date of this posting. If passed, this posting will be updated and small businesses should consult with an experienced business attorney to make sure they are in compliance.