ANDREA GACKI
DIRECTOR, FINCEN
OPENING REMARKS
AS PREPARED FOR DELIVERY
BENEFICIAL OWNERSHIP INFORMATION REPORTING EVENT
MEDIA, PENNSYLVANIA
Good afternoon. I want to thank you all for coming out today, and I especially want to thank Congresswoman Scanlon and her staff for their partnership in bringing us together. I’m honored to be with you to discuss the work of the Financial Crimes Enforcement Network—or FinCEN—and more specifically, to answer the question of why implementing the beneficial ownership information reporting requirements of the Corporate Transparency Act is one of our top priorities.
But first, I thought it would be helpful to explain a bit more about what FinCEN does, so you can understand why this initiative is so vital to our broader efforts to strengthen U.S. national security and protect our financial system.
First, FinCEN issues regulations to combat money laundering, terrorist financing, and other forms of illicit finance. Those regulations require that approximately 300,000 financial institutions report timely and accurate information under the Bank Secrecy Act regarding suspicious activity and certain transactions.
We then provide access to this information to law enforcement and other national security agencies. We also have teams of analysts who examine this reporting using advanced analytic tools and techniques to map illicit networks, identify trends and typologies, and isolate targets for investigations and enforcement. This helps law enforcement investigate serious crimes like narcotrafficking, human trafficking, fraud, and identity theft.
At FinCEN, we also employ various tools to hold illicit or noncompliant actors accountable. In addition to our rigorous support of civil and criminal investigations by other agencies, FinCEN imposes civil money penalties when U.S. financial institutions fail to comply with the Bank Secrecy Act’s important mandate to protect national security and the integrity of our financial system.
We are also implementing the Anti-Money Laundering Act of 2020, including the Corporate Transparency Act, which is an important piece of the puzzle as we work to stop bad actors from exploiting the U.S. financial system.
With this background in mind, I want to turn back to my original question: Why is it so important for small businesses to report beneficial owners, the real people behind their companies?
Terrorist financiers, drug kingpins, and other criminals use anonymous corporate structures to launder, move, and hide illicit funds into and through the United States. This dirty money undermines legitimate business activity and compromises U.S. economic and national security. Moreover, the effects of financial crime are detrimental to cities, towns, neighborhoods, and families across America.
Human trafficking, fraud schemes, elder abuse, narcotraffickers, ransomware attackers, and other bad actors often rely on anonymous shell companies to facilitate these serious crimes. Examples of this can hit close to home.
Last year, a resident of Aldan pled guilty to a scheme to defraud the elderly of more than $1 million. As part of these scheme, the co-conspirators stole the life savings of dozens of incapacitated wards while serving as their court-appointed guardian. With unfettered access to their bank accounts, pensions, real estate, and other assets, they stole money from the wards’ bank accounts by writing unauthorized checks to companies, including shell companies, they controlled.
As another example, a few years ago the U.S. Attorney for the Eastern District Pennsylvania announced that an illegal internet sports company had agreed to forfeit more than $46 million as part of a settlement agreement into their activity. The company in question accepted wagers from and made payouts to U.S. bettors, and transferred more than $46.8 million in proceeds earned from its illegal gambling activities in order to hide the nature, location, source, and control of the funds. To do so, the operating principal hid his control by using an alias and operating the business through several shell companies.
Both of these examples, as you may have detected, involved shell companies. Corporate anonymity gives criminals a head start over law enforcement. Investigators must devote substantial time and resources to show who the real person is that controls or owns an entity. Criminals know about this advantage and use it to further enrich themselves and exploit the U.S. financial system.
In 2021, Congress enacted the bipartisan Corporate Transparency Act, or CTA, to help law enforcement fight this illicit activity. The CTA peels back the layers of anonymity by requiring many companies doing business in the United States to report information to FinCEN about their beneficial owners—in other words, the real people who own or control them.
The information reported to FinCEN is housed in a secure, non-public database, and we’ve set rigorous standards around access and data-sharing to ensure that only authorized recipients can obtain beneficial ownership information. We are providing access to law enforcement and other partners in a phased approach to ensure this data is protected and fulfills the law enforcement and national security purposes laid out in the CTA.
I’d like to take a moment to discuss how the beneficial ownership information reported to FinCEN might help bring bad actors to account in the real world.
In 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control, or OFAC—which administers and enforces economic sanctions—took action against a Russian oligarch named Suleiman Abusaidovich Kerimov that should have prevented him from benefitting from his assets in the United States. For approximately four years after this action, however, Kerimov continued to use a complex series of legal structures to continue to retain an interest in, and benefit from, his over $1 billion in assets in the United States. These funds were invested in large public and private U.S. companies and managed by a series of U.S. investment firms and facilitators. Along the way, Kerimov and his proxies used various layers of shell companies, including LLCs, to conceal his interest. In 2022, OFAC publicly identified a Delaware-based trust that Kerimov was leveraging. Untangling this web of corporate structures allowed OFAC to ensure that Kerimov’s assets in the United States remain blocked and inaccessible to him.
Identifying this network required an extensive, multi-year enforcement investigation into Kerimov’s U.S. holdings by OFAC. Beneficial ownership information reporting can make these types of investigations more efficient by providing a direct resource for law enforcement, national security, and intelligence officials. It can give law enforcement an advantage over illicit actors, diminish the head start that corporate anonymity provides, and ultimately level the playing field for legitimate American businesses.
But let me be clear. Small business owners doing their best to comply with the law should not lose sleep over these new reporting requirements. The CTA penalizes willful violations of the law, and this is where we plan to focus our enforcement actions. It’s not a “gotcha” exercise, and we’re not looking to needlessly burden America’s thriving small business community.
On the other hand, the illicit actors that the CTA targets—kleptocrats, criminals, money launderers, terrorist financiers, tax evaders, and others looking to manipulate America’s corporate system to hide their identities—should lose sleep over this law.
As more legitimate and law-abiding businesses comply with the requirements and report beneficial ownership information, bad actors will increasingly be forced into tough choices that jeopardize their ability to perpetuate crime undetected.
If they choose not to file, or if they file falsely, that may trigger an investigation. If they file true beneficial ownership information, they lose the anonymity that protects their criminal enterprise.
In other words, more transparency means fewer opportunities for bad actors to avoid detection, even when they think they’re hiding.
Nevertheless, we also know that running a small business is not easy. I know this firsthand because I come from a family of small business owners. I was very little when my dad went into business for himself, starting an excavating construction business in Flint, Michigan. I also witnessed the long hours my brother put in to run his small bakery in Bay City, Michigan, which brought together back-breaking manual labor and a lot of paperwork.
Experiences like my family’s are why, in every step of implementing this law, we’ve considered small business owners and the potential burden that any regulation might impose on their day-to-day operations.
Filing a report is easy and free of charge, and for companies with simple ownership structures, we estimate that it should take about 20 minutes.
The majority of companies that are required to file should be able to complete the process without the help of an attorney or accountant.
And it’s not an annual requirement: unless you need to update or correct information, beneficial ownership reporting is a one-time filing.
To successfully support law enforcement and other officials as they work to protect our national security and economy, it’s important for small businesses across the country to do their part. In terms of deadlines, most companies’ reports aren’t due until January 1, 2025. But we encourage you not to wait. The database is live and ready when you are. If you created or registered your business this year, in 2024, you have 90 days to file your initial report. Starting in 2025, newly created or registered companies must file within 30 days.
We have additional information about these deadlines and lots of guidance, FAQs, videos, and other materials to make compliance as easy as possible on our website, fincen.gov/boi—and we thank small businesses in advance for doing their part to help stop illicit finance.
Thanks again for joining me today, and thanks again to Congresswoman Scanlon and her office for bringing us together. Before we open the floor to questions, I’d like to first play a brief video that shows you just how simple filing your beneficial ownership information can be. As part of this video, you will see the information necessary to have on hand to file your beneficial ownership information report. This will include the term “company applicant” — which we can talk about more after the video — but for companies created in this calendar year means the name and address of any individual who filed paperwork with the State to establish your business.
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