TIA On Beneficial Ownership Language Within NDAA

On December 3, 2020, the Congressional Conference Committee in charge of the National Defense Authorization Act (NDAA) has released their report which is expected to pass both chambers in expedited fashion, this comes however with the looming veto threat from the President, but Congress likely has the votes to override the veto. This crucial legislation is an annual bill that focuses on all topics military related, it sets the budget and expenditures for the United States Armed Forces. This year’s NDAA includes a provision which is germane to TIA membership, it’s called beneficial ownership and effects the way you incorporate and create an LLC.

Current incorporation and LLC inception laws are on a state-by-state basis, this will not change. However, now at incorporation you will be asked to provide information pertaining to the beneficial ownership of the entity. For most of you this will be simple, you will provide your name, address, date of birth and specific identification number (driver’s license, state issued license or passport) to the Department of Treasury. It is also important to note that penalties will only be levied for willful intent and falsifying information. There are also several privacy concerns that the business community has fought for to ensure protection of the requested proprietary information. Finally, there are several exceptions for the reporting requirements, the most prevalent for our members would be:

• having 20 or more employees
• $5 million in gross revenue; and
• a physical office in the United States.

Here are major parts of the beneficial ownership language:

• Establishing federal disclosure requirements of beneficial ownership information that will be maintained in a comprehensive federal registry, with strict privacy protections, accessible by federal and local law enforcement.
• Improving the recruitment and retention of top talent to combat money laundering and terrorism by providing special hiring authority at the Department of Treasury and FinCEN.  
• Prioritizing innovation and technology in AML-CFT monitoring and reporting through the establishment of a new Subcommittee on Innovation and Technology, updated guidance on financial technology risk assessments, and a Financial Crimes Tech Symposium.
• Facilitating communication and information sharing between FinCEN, national security agencies, law enforcement and financial institutions through the establishment of new programs and reporting mechanisms. 
• Requiring streamlined data and real time reporting of suspicious activity reports and requiring law enforcement to coordinate with financial regulators to provide periodic feedback to financial institutions on their suspicious activity reporting.

Congress has been pushing for this language in order to provide better oversight of LLCs and to crack down on fraudulent entities that operate in this space. TIA has been lobbying on this issue for a while in order to make the language more business friendly, as we do not support more burdensome requirements on our members. This language is a major improvement over what was being considered in the U.S. House of Representatives.

If you have any questions, please contact advocacy@tianet.org.