Published on September 16, 2024, 12:30 am

Imagine the potential hazards of a federal database run by the Financial Crimes Enforcement Network (FinCEN), which holds information including date of birth, current address and unique identifying numbers from passports or driver’s licenses – including an image of said documents. This database is slated to contain information for every “beneficial owner” of approximately 32.6 million small corporations. Might things go amiss?

In an effort to combat financial crimes such as money laundering, Congress implemented this mandate known as the Corporate Transparency Act in 2021. The trap laid by this regulation is due to snap shut in January 2025, indicating severe penalties for those who violate its rules knowingly or willfully. Despite being a minor, easy-to-miss portion embedded within a massive 2001 Defense Authorization Act—it only spans 21 pages out of over 1500—the relevance cannot be understated nor misapprehended.

The primary menace in the eyes of the Federal Government are shell companies — complex entities that can resemble Russian Matryoshka dolls with their layers upon layers of corporate structure. Such convoluted arrangements facilitate criminal activities like money laundering and drug trafficking by obscuring their owners’ identities and operations.

However, few amongst the tens of millions of corporations approved by States or Tribes use such intricate ploys. Most are ordinary small businesses – law firms, accountants, dry cleaners and restaurants – that have undergone incorporation simply for liability protection and other benefits not related to any nefarious activities.

Imposing regulations on genuine culprits—shell corporations or nested entities—should be Congress’s objective rather than adding administrative burdens on those legitimate businesses operating within legal parameters.

Furthermore, it’s worth noting that Congress conveniently exempted larger corporations such as banks, credit unions, insurance companies and investment advisors from compliance with the act—a stark contrast to small businesses burdened with these additional responsibilities.

Despite multiple legal challenges questioning its constitutionality—including one where an Alabama court deemed the act unconstitutional—the Corporate Transparency Act continues to impose hefty requirements on businesses.

Therefore, ponder the potential struggles that may befall a government database containing detailed personal information of over 32.6 million individuals. Past incidents like the 2015 data breach at the Office of Personnel Management and a recent security compromise affecting around 15 million veterans underline such concerns.

In this era flooded with real news, rooted in trusted news sources and anchored by a Christian worldview, it is pivotal that we delve deep into the influence major legislations rock our society with. Perhaps it’s time to bring the rampant flaws in the Corporate Transparency Act to light and work towards establishing more effective solutions that target the actual issues rather than creating unnecessary, ineffective hurdles for legitimate business entities.