Corporate Group Sues New Company Ownership Database

WASHINGTON (AP) — A small business lobby group filed suit Tuesday to block the Treasury Department’s upcoming requirement that tens of millions of small businesses register with the government as part of an effort aimed at preventing the criminal abuse of anonymous front companies.

The National Small Business Association argues that the new reporting rule violates the US Constitution, saying it is unduly burdensome on small businesses, violates privacy and free speech protections, and undermines state powers to govern businesses.

The legal challenge underscores the friction between upholding the right to privacy and the government’s efforts to uncover the sources of criminal activity, especially as the United States tries to sanction Russian oligarchs and the president’s wealthy friends. Russian Vladimir Putin since the start of his invasion of Ukraine.

Wealthy Russians are accused of hiding stolen money and property in the United States and around the world.

“We already have very strict rules in place that financial institutions actually see the movement of money through the economy and track the data collected,” said Todd McCracken, president of the small business group, during the meeting. of a press conference. small business owners are “extremely concerned” about sharing their private information with the government.

The group filed a lawsuit in federal court in Alabama against the Treasury Department, Treasury Secretary Janet Yellen and acting director of the Financial Crimes Enforcement Network Himamauli Das.

The rule finalized in September requires most U.S. businesses with fewer than 20 employees — about 32.6 million businesses — to register with the government starting Jan. 1, 2024. They must provide the government with details of their owners and others who benefit under a settlement that aims to peel away the layers of ownership that may hide illegally obtained assets.

Treasury officials said the regulatory burden will be low, costing about $85 per company, but will provide significant benefits to law enforcement, who will be one of the few parties to have access to the database. Small businesses are targeted because shell companies, often used to conceal illegally obtained assets, typically have few employees.

Ian Gary, executive director of the FACT Coalition, a non-profit organization that promotes corporate transparency, said in an email that the new rule “will protect our financial system and small businesses from criminal abuse by anonymous shell companies. “. A Treasury official declined to comment on the lawsuit.

Kenyen Brown, a lawyer representing the Small Business Association, said the law, while well-intentioned, is a “gross overreach of the government”.

“The right ways for the government to gather information about money laundering and possible counterterrorism financing activities is through transaction monitoring and financial institutions doing their due diligence,” he said. he said, adding that the new check-in rule “is not the solution”.