U.S. GOVERNMENT PUBLISHING OFFICE

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POTENTIAL CONSEQUENCES OF FINCEN’S 

BENEFICIAL OWNERSHIP RULEMAKING 

HEARING 

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY, 

ILLICIT FINANCE, AND 

INTERNATIONAL FINANCIAL INSTITUTIONS 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED EIGHTEENTH CONGRESS 

FIRST SESSION 

JULY 18, 2023 

Printed for the use of the Committee on Financial Services 

Serial No. 118–43 

( 
(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

PATRICK MCHENRY, North Carolina, Chairman 

FRANK D. LUCAS, Oklahoma 

PETE SESSIONS, Texas 

BILL POSEY, Florida 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

ROGER WILLIAMS, Texas 

FRENCH HILL, Arkansas, Vice Chairman 

TOM EMMER, Minnesota 

BARRY LOUDERMILK, Georgia 

ALEXANDER X. MOONEY, West Virginia 

WARREN DAVIDSON, Ohio 

JOHN ROSE, Tennessee 

BRYAN STEIL, Wisconsin 

WILLIAM TIMMONS, South Carolina 

RALPH NORMAN, South Carolina 

DAN MEUSER, Pennsylvania 

SCOTT FITZGERALD, Wisconsin 

ANDREW GARBARINO, New York 

YOUNG KIM, California 

BYRON DONALDS, Florida 

MIKE FLOOD, Nebraska 

MIKE LAWLER, New York 

ZACH NUNN, Iowa 

MONICA DE LA CRUZ, Texas 

ERIN HOUCHIN, Indiana 

ANDY OGLES, Tennessee 

MAXINE WATERS, California, Ranking 

Member 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DAVID SCOTT, Georgia 

STEPHEN F. LYNCH, Massachusetts 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

JIM A. HIMES, Connecticut 

BILL FOSTER, Illinois 

JOYCE BEATTY, Ohio 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

VICENTE GONZALEZ, Texas 

SEAN CASTEN, Illinois 

AYANNA PRESSLEY, Massachusetts 

STEVEN HORSFORD, Nevada 

RASHIDA TLAIB, Michigan 

RITCHIE TORRES, New York 

SYLVIA GARCIA, Texas 

NIKEMA WILLIAMS, Georgia 

WILEY NICKEL, North Carolina 

BRITTANY PETTERSEN, Colorado 

MATT HOFFMANN, Staff Director 
(III) 

SUBCOMMITTEE ON NATIONAL SECURITY, ILLICIT FINANCE, 

AND INTERNATIONAL FINANCIAL INSTITUTIONS

BLAINE LUETKEMEYER, Missouri, Chairman 

ANDY BARR, Kentucky 

ROGER WILLIAMS, Texas 

BARRY LOUDERMILK, Georgia 

DAN MEUSER, Pennsylvania 

YOUNG KIM, California, Vice Chairwoman 

ZACH NUNN, Iowa 

MONICA DE LA CRUZ, Texas 

ANDY OGLES, Tennessee 

JOYCE BEATTY, Ohio, Ranking Member 

VICENTE GONZALEZ, Texas 

WILEY NICKEL, North Carolina 

BRITTANY PETTERSEN, Colorado 

BILL FOSTER, Illinois 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

July 18, 2023 ..................................................................................................... 1 

Appendix: 

July 18, 2023 ..................................................................................................... 35 

WITNESSES 

TUESDAY, JULY 18, 2023 

Kalman, Gary, Executive Director, Transparency International U.S. ................ 9 

Kuhlman, Kevin, Vice President, Federal Government Relations, National 

Federation of Independent Business (NFIB) ..................................................... 5 

Richards, James, Principal and Founder, RegTech Consulting LLC .................. 7 

Selenke, Pete, Vice President and Anti-Money Laundering/Bank Secrecy Act 

Officer, The Central Trust Bank, Jefferson City, Missouri, on behalf of 

the American Bankers Association (ABA) ......................................................... 8 

APPENDIX 

Prepared statements: 

Kalman, Gary ................................................................................................... 36 

Kuhlman, Kevin ................................................................................................ 50 

Richards, James ................................................................................................ 60 

Selenke, Pete ..................................................................................................... 101 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Luetkemeyer, Hon. Blaine: 

Written statement of the American Institute of CPAs (AICPA) .................. 112 

AICPA & CIMA, Together as the Association of International Certified 

Professional Accountants, ‘‘Beneficial Ownership Information (BOI) Report Summary of Data Fields,’’ dated January 1, 2023 ............................. 121 

American Institute of CPAs (AICPA) letter in support of H.R. 4035, 

the Protecting Small Business Information Act of 2023 ............................ 123 

Written statement of the Independent Community Bankers of America 

(ICBA) ............................................................................................................ 125 

Written statement of the U.S. Chamber of Commerce .................................. 128 

Beatty, Hon. Joyce: 

Written statement of Citizens for Responsibility & Ethics in Washington 

(CREW) .......................................................................................................... 129 

Written statement of the Financial Accountability and Corporate Transparency (FACT) Coalition ............................................................................. 133 

Written statement of the Foundation for Defense of Democracies (FDD) ... 138 

Loudermilk, Hon. Barry: 

Written statement of the National Association of Manufacturers (NAM) ... 142 

Written responses to questions for the record submitted to James Richards ................................................................................................................ 150 

Meuser, Hon. Dan: 

Written responses to questions for the record submitted to James Richards ................................................................................................................ 154 

Written responses to questions for the record submitted to Pete Selenke .. 156 

Nunn, Hon. Zach: 

Letter to FinCEN from the Iowa Bankers Association re: Beneficial Ownership Information Reporting Requirements Proposal, dated February 

3, 2022 ............................................................................................................ 157 
Page

VI 

Nunn, Hon. Zach—Continued 

Letter from the Office of the Iowa Secretary of State to various Members 

of Congress, dated July 3, 2023 ................................................................... 164 

IRS release warning of a new tax scam, dated July 3, 2023 ........................ 173 

Pettersen, Hon. Brittany: 

Written responses to questions for the record submitted to Pete Selenke .. 176 

Waters, Hon. Maxine: 

Written responses to questions for the record submitted to Gary Kalman . 178 

Written responses to questions for the record submitted to Kevin 

Kuhlman ........................................................................................................ 188 

Written responses to questions for the record submitted to James Richards ................................................................................................................ 190 

Written responses to questions for the record submitted to Pete Selenke .. 194 
(1) 

POTENTIAL CONSEQUENCES OF FINCEN’S 

BENEFICIAL OWNERSHIP RULEMAKING 

Tuesday, July 18, 2023 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON NATIONAL SECURITY, ILLICIT FINANCE, AND

INTERNATIONAL FINANCIAL INSTITUTIONS, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:03 p.m., in room 

2128, Rayburn House Office Building, Hon. Blaine Luetkemeyer 

[chairman of the subcommittee] presiding. 

Members present: Representatives Luetkemeyer, Barr, Williams 

of Texas, Loudermilk, Meuser, Kim, Nunn, De La Cruz, Ogles; 

Beatty, Nickel, Pettersen, Foster, Vargas, and Gottheimer. 

Ex officio present: Representatives McHenry and Waters. 

Also present: Representative Himes. 

Chairman LUETKEMEYER. The Subcommittee on National Security, Illicit Finance, and International Financial Institutions will 

come to order. 

Without objection, the Chair is authorized to declare a recess of 

the subcommittee at any time. 

Today’s hearing is entitled, ‘‘Potential Consequences of FinCEN’s 

Beneficial Ownership Rulemaking.’’ 

I now recognize myself for 4 minutes to give an opening statement. 

Today’s hearing focuses on beneficial ownership (BO) and the Financial Crimes Enforcement Network’s (FinCEN’s) rulemaking required by the Corporate Transparency Act (CTA). Beneficial ownership information reporting has been touted as one of the most important national security tools, yet no one knows anything about it. 

It is my hope that today’s hearing will not only inform our constituents of this forthcoming rule, but will shine light on the ways the 

Treasury Department and FinCEN have distorted the purpose of 

this rulemaking. 

Before we dive into the weeds, however, it is important to set the 

stage. Some of my colleagues across the aisle today may insinuate 

that Committee Republicans never supported beneficial ownership, 

and that our actions since the passage of the CTA were carried out 

to undermine the legitimacy of the final rule. Nothing could be further from the truth. I personally worked with former Congresswoman Carolyn Maloney on an earlier iteration of the CTA. This 

bill, while not identical to the final CTA, was founded on the same 

principles. 
2 

On one hand, Federal law enforcement and our local sheriffs 

were banging down our doors, warning about the ways in which 

bad actors were hiding illicit profits in shell companies. And on the 

other hand, small, mid-sized, and large banks alike were frustrated 

with the burdensome regulation without any feedback from the 

government. 

To fix this problem, Chair Maloney and I decided to shift the 

burden from the banks and place it on the Federal Government. If 

law enforcement and FinCEN wanted the information seamlessly, 

they would need to be responsible for its collection. Since that initial bipartisan attempt, the CTA changed slightly, but never lost its 

foundational principle. If the U.S. Government wants the information, the U.S. Government should be responsible for it. Now, we 

find ourselves in a precarious situation. We are less than 6 months 

away from the CTA’s effective date of January 1, 2024, and we are 

left with more questions than answers. 

In an effort to prepare for today’s hearing, I joined a letter in 

June with Chair McHenry, Chair Williams, and Chair Womack expressing our concerns with FinCEN’s rollout of the Beneficial Ownership Plan. This letter asks some important questions about how 

FinCEN plans to educate 32.6 million small businesses about their 

new obligations. This should not have been a difficult letter to respond to. With less than 6 months to go, the education plans 

should be completed and ready to roll out, well before the system 

goes live in January. Disturbingly, despite the committee’s request 

for information on the education and rollout strategy, there has 

been no response. The education issue, while it may seem trivial 

to those not paying attention, is indicative of the larger issues with 

the Beneficial Ownership Information (BOI) rulemaking process. 

FinCEN and Treasury have transformed a simple-to-follow filing 

system into a complex maze, leaving many scratching their heads. 

As I am sure we will hear from our witnesses, FinCEN is asking 

for more money and more resources, but time and time again they 

favor complexity over straightforwardness, complexity that will result in small business owners needing to hire lawyers to figure out 

simple things such as whether they need to file. This rulemaking 

process must be corrected. Our constituents deserve better than 

what FinCEN has put forward thus far. I do not see how FinCEN 

can move forward with a January 1st effective date without having 

a plan. 

I ask all of my colleagues to remember that if this filing system 

is not seamless, it is our small businesses picking up the pieces 

from COVID that will suffer. We need FinCEN to do better, and 

today’s hearing shall be a start in outlining what that could look 

like. 

The Chair now recognizes the ranking member of the subcommittee, the gentlewoman from Ohio, Mrs. Beatty, for 4 minutes 

for an opening statement. 

Mrs. BEATTY. Thank you so much, Mr. Chairman, and thank you 

for holding this hearing. And thank you to our witnesses for appearing today to discuss FinCEN’s beneficial ownership rulemaking. 

As we speak, oligarchs, kleptocrats, and other criminals are 

using anonymous shell companies to engage in money laundering, 
3 

terrorist financing, tax fraud, corruption, bribery, and the list goes 

on with other illicit activity. That is why, under Democrat leadership, this committee passed landmark legislation to protect our national security and to prevent the abuse of our financial system by 

bad actors, both foreign and domestic. That was all led by thenChairwoman Maxine Waters. 

Committee Democrats achieved the most-sweeping anti-money 

laundering reforms in decades with the Anti-Money Laundering 

Act of 2020 (AMLA). This major update to the Bank Secrecy Act 

(BSA) contained the historic Corporate Transparency Act (CTA), 

which aimed to prevent the use of shell companies to launder or 

hide illicit funds by imposing, for the first time, a Federal requirement to identify beneficial owners of certain companies. The CTA 

was intended to streamline industry compliance, increase transparency, and make it easier for small businesses to access banking 

services, while also making critical improvements to national security. 

Given the significance of these reforms and their considerable 

impact on banks, small businesses, and other reporting companies, 

it is critical that we efficiently implement these changes while 

minimizing the burden on affected industry. That is why Democrats strongly support robust funding for FinCEN to ensure it has 

the resources it needs to swiftly and properly implement the CTA. 

By contrast, my colleagues on the other side of the aisle have 

proposed substantial budget cuts to FinCEN and other offices at 

Treasury charged with protecting our national security. I am going 

to say that again: protecting our national security. The proposed 

cuts would reduce current funding levels by approximately 22 percent and would require the office to lay off 19 percent of the personnel. I cannot fathom the logic of slashing funds from an office 

that is in the midst of implementing a major policy overhaul pertaining to U.S. national security. 

I agree with you, Mr. Chairman, that today’s hearing is an important discussion about certain flaws in FinCEN’s beneficial ownership rulemaking that deviate from the intent of Congress. But I 

am concerned about the loopholes in draft filing form that undermine the effectiveness of the law, as well as proposals to greatly 

restrict access to the BOI database, which would render new rules 

practically useless. I also agree that FinCEN must do better in providing outreach and education to small businesses to ensure compliance with the law. These drastic budget cuts will only slow implementation of the CTA, weaken FinCEN’s ability to pursue bad 

actors, and ultimately, jeopardize our national security. 

Mr. Chairman, I ask unanimous consent to enter into the record 

two statements: one from the Financial Accountability and Corporate Transparency (FACT) Coalition; and one from Citizens for 

Responsibility & Ethics in Washington (CREW.) 

Chairman LUETKEMEYER. Without objection, it is so ordered. 

Mrs. BEATTY. Both of these articles will reinforce my testimony. 

Thank you once again to our witnesses., and I certainly look forward to your testimony. I yield back. 

Chairman LUETKEMEYER. The gentlelady’s time has expired. The 

Chair now recognizes the Chair of the full Financial Services Com-
4 

mittee, the gentleman from North Carolina, Mr. McHenry, for 1 

minute. 

Chairman MCHENRY. Thank you, Mr. Chairman. I want to first 

commend the Administration on the appointment of Andrea Gacki 

as the new Director of FinCEN. This is welcome news, and I am 

hopeful it marks a turning point for the agency. 

Two Congresses ago, lawmakers came together to pass the Financial Transparency Act. The intention was to safeguard our financial system from bad actors while alleviating burdensome and 

duplicative reporting requirements. Unfortunately, the Biden Administration’s proposed beneficial ownership regime is not consistent with congressional intent. The Treasury Department has 

made the final rule as complicated as possible by altering timelines 

and definitions, and even failing to put together a simple filing 

form. It is clear that if changes are not made, Congress must act 

to delay the rulemaking’s effective date. I look forward to working 

with incoming Director Gacki to address the concerns of members 

of this committee in coordination with the Administration. This is 

a very important item for businesses across America and for millions of Americans who will have to comply with these new regulations. 

Thank you, Mr. Chairman. Thanks for your leadership, and I 

yield back. 

Chairman LUETKEMEYER. The gentleman yields back. We have a 

minute for the ranking member of the Full Committee, but she apparently is not here. With that, we will move on to the introduction 

of our witnesses today, and we thank each of them for coming. 

First, we have Kevin Kuhlman, the vice president of Federal 

Government relations at the National Federation of Independent 

Business (NFIB). Mr. Kuhlman leads the NFIB Federal Government Relations team, guiding policy priorities and directing the organization’s Federal advocacy efforts. Welcome. 

Second, we have Jim Richards, the founder and principal of 

RegTech Consulting LLC. Prior to forming RegTech Consulting in 

2018, Mr. Richards was executive vice president, Bank Secrecy Act 

(BSA) officer, and global director of financial crimes risk management for Wells Fargo & Company for 13 years, and the anti-money 

laundering operations executive at Bank of America. Welcome, Mr. 

Richards. 

Third, we have Pete Selenke, the vice president and Anti-Money 

Laundering/Bank Secrecy Act officer for The Central Trust Bank, 

a privately-held, $19-billion bank, headquartered in Jefferson City, 

Missouri, in my district. Mr. Selenke has over 32 years of experience in Bank Secrecy Act compliance. Mr. Selenke, welcome. 

And finally, we have Gary Kalman, the executive director of 

Transparency International U.S. He oversees the organization’s 

U.S. operations, focusing on illicit finance and the U.S. role in global anti-corruption efforts. Welcome, Mr. Kalman. 

We thank each of you for taking the time to be here. Mr. Richards flew in from California, and Mr. Selenke from Missouri, and 

we are excited to have them both here—actually, all four of you. 

Each of you will be recognized for 5 minutes to give an oral presentation of your testimony. And without objection, each of your written statements will be made a part of the record. 
5 

Those microphones in front of you move, so make sure that you 

pull them as close to you as possible. We have somebody trying to 

transcribe this, and if they can’t hear it, it can’t be transcribed. The 

microphones are very sensitive, but you have to get right on top of 

them, so if you would be willing to pull those things forward to you, 

that would be great. 

Mr. Kuhlman, you are now recognized for 5 minutes for your remarks. 

STATEMENT OF KEVIN KUHLMAN, VICE PRESIDENT, FEDERAL 

GOVERNMENT RELATIONS, NATIONAL FEDERATION OF 

INDEPENDENT BUSINESS (NFIB) 

Mr. KUHLMAN. Good afternoon. Thank you, Chairman Luetkemeyer, Ranking Member Beatty, Chairman McHenry, and members of the subcommittee. My name is Kevin Kuhlman, with the 

National Federation of Independent Business (NFIB). NFIB has 

long opposed beneficial ownership information (BOI) reporting requirements because the regulations disproportionately impact 

small businesses under the threat of severe penalties. 

NFIB believes the Financial Crimes Enforcement Network 

(FinCEN) has overreached in implementing the legislation, failing 

both to minimize reporting burdens and provide clarity to small 

businesses. Few small businesses are aware of their requirements 

that begin in less than 6 months, and FinCEN is lacking in education and outreach to the small business community, and I appreciate everyone for recognizing that. The Corporate Transparency 

Act was inserted as a House amendment into an unrelated and 

must-pass bill, the National Defense Authorization Act of 2021. It 

never received a standalone vote in the Senate. Burying the provision in a large bill contributed to the lack of awareness of the requirements. 

The Corporate Transparency Act requires small businesses with 20 or fewer employees and less than $5 million in revenue to file 

periodic reports containing personally identifiable information (PII) 

with FinCEN. Failure to file completed and updated reports could 

result in civil penalties of up to $10,000 and criminal penalties of 

up to 2 years in prison. It is one of the most-expansive small business regulation in history, affecting 32.6 million small businesses 

in the first year, and 6 million small businesses every year thereafter, according to FinCEN’s estimates. The cost of this regulation 

is a staggering $23 billion in the first year, and $6 billion per year 

moving forward. It was the costliest final regulation issued in 2022. 

FinCEN failed to minimize burdens on reporting companies. Congress instructed the Secretary of the Treasury, when prescribing 

regulations, to adhere to three directives: first, seek to minimize 

burdens on reporting companies; second, provide clarity to reporting companies concerning identification of their beneficial owners; 

and third, collect information that is highly useful to national security. NFIB believes FinCEN repeatedly failed to balance these statutory directives, often disregarding the first two intended to minimize burdens and provide clarity to small businesses. NFIB believes strongly that FinCEN overreached on the first rulemaking, 

which defines who must report, what information they must report, 

and by when they must report that information. 
6 

Regarding who must report, FinCEN should have adopted or 

could have adopted a simpler definition of, ‘‘beneficial owner,’’ such 

as the existing definitions in the customer due diligence rule, which 

requires a maximum of five individuals to report their BOI. Instead, FinCEN broadly expanded definitions, which will result in 

employees with no ownership interest being swept into reporting. 

These definitions go beyond congressional intent and create compliance difficulty. 

Regarding what information must be reported, the statute only 

requires four pieces of information: full legal name; date of birth; 

current residential or business address; and a unique identifying 

number from an acceptable ID document or a FinCEN identifier. 

The final rule mandates that small businesses report personal information beyond this, which is not explicitly required in the statute, including taxpayer identification information, either an Employer Identification Number (EIN), a Taxpayer Identification 

Number (TIN), or a Social Security Number (SSN), and scanned 

copies of their drivers’ licenses or passports. As a result, the draft 

application has 50 questions and spans 8 pages. 

Timing of reports: NFIB is concerned that FinCEN ignored congressional intent when dictating timelines. FinCEN failed to minimize reporting burdens on small businesses by accelerating these 

timelines. For initial reporting, they chose 1 year instead of the allowable 2 years. For updated reporting, they chose 30 days instead 

of the allowable 1 year, and for corrected reporting, they chose 30 

days instead of the allowable 90 days. FinCEN consistently rejected 

lengthening these timelines as permitted by the statute, citing national security reasons. 

Very few small businesses are aware of these requirements, 

which begin in less than 6 months, on January 1, 2024. Most small 

business owners are unfamiliar with FinCEN, and receiving a notice in the mail a few weeks before they must file may be disregarded as a potential scam. After all, as recently as July 3rd, the 

IRS issued a scam warning for taxpayers for an official-looking envelope requesting very similar personal information, including 

scanned photos of their driver’s license. 

FinCEN is required to issue a small business compliance guide 

under the Small Business Regulatory Enforcement Fairness Act 

(SBREFA). NFIB urges FinCEN to make this guide available and 

accessible as quickly as possible. In addition, FinCEN should issue 

guidance to provide clarity on exactly what types of entities must 

file BOI reports. There is still ambiguity as to whether certain sole 

proprietorships and general partnerships must file reports. I included some legislative recommendations in my written testimony. 

NFIB would welcome the opportunity to work with the members 

of this committee to provide relief from the most-problematic requirements of the BOI reporting. Thank you for the opportunity to 

testify today. 

[The prepared statement of Mr. Kuhlman can be found on page 

50 of the appendix.] 

Chairman LUETKEMEYER. The gentleman’s time has expired. Mr. 

Richards, you are now recognized for 5 minutes. 
7 

STATEMENT OF JAMES RICHARDS, PRINCIPAL AND FOUNDER, 

REGTECH CONSULTING LLC 

Mr. RICHARDS. Thank you, Chairman Luetkemeyer, Ranking 

Member Beatty, and distinguished members of the subcommittee, 

and thank you for the invitation to appear before you today to discuss the potential consequences of FinCEN’s beneficial ownership 

rulemaking. 

My perspective is that of someone who has been in the antimoney laundering field since the 1990s. I welcomed the AML Act 

as an opportunity to get back to what should be the singular purpose of our anti-money laundering laws, and that is protecting the 

financial system by providing timely, actionable intelligence to law 

enforcement in an efficient, effective, and secure way. And I welcomed the Corporate Transparency Act as an opportunity to improve how we were collecting and using beneficial ownership information. 

The practical implications of FinCEN’s beneficial ownership rulemaking will be felt by 35 million small businesses, more than 

16,000 financial institutions, and more than 400 law enforcement 

agencies. More than 60 million Americans will have their personal 

information and copies of their driver’s license or passport in a centralized database run by FinCEN, an agency few of those 60 million have ever heard of. 

But FinCEN is struggling to promulgate the rules needed to implement the Anti-Money Laundering Act (AMLA) and the Corporate Transparency (CTA). FinCEN has published none of the 

nine rules needed to implement the AML Act, and has only published one of the three rules to implement the Corporate Transparency Act. And those rules that are proposed and finalized often 

go beyond congressional intent, and many are stunningly complex. 

If the reason why FinCEN is struggling to meet its mandate is, in 

fact, resource constraints, then FinCEN would be doing the opposite of what it is currently doing. It would be putting out simple 

rules, adhering to congressional intent, and publicly acknowledging 

that it must keep things simple since it doesn’t have the resources 

to do anything else. 

The potential positive consequences of FinCEN’s beneficial ownership rulemaking, done right, are far-reaching. If we get this 

right, all this rulemaking, and guidance, and access, and reporting 

will demonstrably and measurably reduce money laundering and financial crime—if we get it right. But with continuing resource constraints and required rulemakings remaining incomplete and no 

practical guidance to 35 million small businesses, we are not going 

to get it right on January 1, 2024. 

America needs the Corporate Transparency Act to succeed, but 

success cannot be achieved by a rushed deployment of complex 

rules that go well beyond congressional intent. Too many of 

FinCEN’s rules and proposed rules are aspirational, without being 

practical. We are deputizing 35 million small businesses and asking 60 million Americans to step up to contribute their most prized 

information. 

FinCEN cannot rush in half-cocked. We need to start simple, 

start strong, whether that is January 1, 2024, 2025, or 2026. We 
8 

can adapt as needed over time, but we need to get it right out of 

the gate. Thank you. 

[The prepared statement of Mr. Richards can be found on page 

60 of the appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Richards. I now recognize Mr. Selenke for 5 minutes. 

STATEMENT OF PETE SELENKE, VICE PRESIDENT AND ANTIMONEY LAUNDERING/BANK SECRECY ACT OFFICER, THE 

CENTRAL TRUST BANK, JEFFERSON CITY, MISSOURI, ON BEHALF OF THE AMERICAN BANKERS ASSOCIATION (ABA) 

Mr. SELENKE. Thank you, Chairman Luetkemeyer, Ranking 

Member Beatty, and members of the subcommittee. Thank you for 

the opportunity to testify today regarding potential consequences of 

FinCEN’s beneficial ownership rulemaking. My name is Pete 

Selenke, and I serve as vice president and Anti-Money Laundering/ 

Bank Secrecy Act officer for The Central Trust Bank, a mid-sized 

bank established in 1902 and headquartered in Jefferson City, Missouri. We directly serve customers in 9 States and at more than 

150 locations. Today, I am pleased to speak on behalf of Central 

Bank and our nearly 3,000 employees, as well as the American 

Bankers Association, whose members include small, mid-sized, regional, and large banks, which together employ more than 2 million people. 

As a banker with more than 32 years’ experience in Bank Secrecy Act compliance, I am personally and deeply committed to protecting the U.S. financial system, our bank, and our bank customers from threats posed by bad actors, and I have seen firsthand 

the successes and challenges of operationalizing BSA regulations. 

Thanks to the hard work of my team of 20 BSA compliance professionals at The Central Bank, I am proud to report that we have 

received two awards from FinCEN in recognition for our work in 

assisting law enforcement in the past 5 years. 

The banking industry has changed dramatically over the past 50 

years, and so have threats posed by bad actors. To combat these 

evolving threats, the ABA strongly supported the enactment of 

both the Anti-Money Laundering Act and the Corporate Transparency Act, which together reflect a consensus among bankers, 

lawmakers, and regulators on the need to modernize our nation’s 

Bank Secrecy Act rules so that the resources dedicated by banks 

can even more effectively and efficiently support law enforcement’s 

work to prevent 21st Century financial crime and terrorism. 

The reforms embodied in these laws carefully balance a number 

of important priorities, including that banks must know, who are 

our customers? Law enforcement needs tools to identify criminals 

who use and exploit shell companies to commit their crimes. The 

burden to the public must be minimalized, including the cost borne 

by financial institutions eager to support law enforcement, and 

Americans’ privacy rights must be protected. 

As BSA/AML professionals, my colleagues and I have dedicated 

our careers to defending the integrity of the U.S. financial system 

from bad actors and protecting our customers. We want nothing 

more than for AMLA and CTA to achieve Congress’ goals, and that 

is why it is so important that FinCEN promulgates regulations to 
9 

implement these reforms in a manner that is consistent with congressional intent. To that end, there are three areas where FinCEN 

must focus when creating a meaningful beneficial ownership regime: use, accuracy, and education. 

First, use. Banks need to be able to use the information in the 

beneficial ownership registry to support broader Bank Secrecy Act/ 

Anti-Money Laundering (BSA/AML) program requirements. 

FinCEN’s proposed limitations on a bank’s ability to use this information to only support customer due diligence program compliance, 

not broader BSA/AML compliance, are inconsistent with congressional intent, and these restrictions will increase banks’ burdens 

instead of reducing them. 

Second, accuracy. The beneficial ownership registry must be a reliable and authoritative source of information. The Federal Government must make sure the information in the registry is accurate. 

This responsibility should not be imposed on those seeking to access the database. If the accuracy of the registry’s information is 

in doubt, banks may not be able to use the database at all. 

And third, education. We will help where we can, but Congress 

did not delegate the responsibility of informing the public of beneficial ownership reporting requirements to banks. The Federal Government needs to educate the public about the new legal obligations to report beneficial ownership information, especially when 

there are serious penalties for noncompliance. 

My colleagues and I have dedicated our careers to defending the 

integrity of the U.S. financial system from bad actors and protecting our customers. We look forward to working with the dedicated professionals at FinCEN to make these rules work for law 

enforcement, for banks, and for our customers. I look forward to 

answering your questions. 

[The prepared statement of Mr. Selenke can be found on page 

101 of the appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Selenke. Mr. Kalman, 

you are recognized for 5 minutes. Welcome. 

STATEMENT OF GARY KALMAN, EXECUTIVE DIRECTOR, 

TRANSPARENCY INTERNATIONAL U.S. 

Mr. KALMAN. Thank you, Mr. Chairman. Chairman Luetkemeyer, Ranking Member Beatty, and distinguished members of the 

subcommittee, on behalf of Transparency International U.S., I appreciate the opportunity to discuss progress towards the implementation of the Corporate Transparency Act, a foundational reform to 

combat transnational crime and corruption. We are part of the 

world’s largest and oldest coalition dedicated to fighting corruption. 

We want to thank the leadership of the Financial Services Committee for working in a bipartisan fashion to enact the CTA. Today, 

more than 100 countries have followed suit, and have adopted or 

have pledged to adopt similar reforms to help protect the integrity 

of our global financial system. 

In the lead-up to the passage of the CTA, the committee heard 

a litany of examples of how anonymous corporate structures were 

used to facilitate the flow of illicit finance. For example, a Global 

Witness report called, ‘‘Hidden Menace,’’ found that in one case, a 

U.S. company that was contracted to supply services to troops in 
10 

Afghanistan was secretly owned by interests associated with the 

Taliban. The United States Government was literally supplying 

funds that could be used to purchase guns and other weapons 

aimed at our troops. 

These reports are why nearly 100 civilian and former military 

national security experts signed a letter to Congress in support of 

the collection of beneficial ownership information. Alarmingly, 

these stories are part of a larger collection of threats that go beyond anecdotes. According to a 2011 study by the Stolen Asset Recovery Initiative, anonymous companies were used to hide the proceeds of corruption in 70 percent of grand corruption cases reviewed, with U.S. entities being the most common. 

To address these harms and many others, Congress appropriately included the CTA in the 2021 National Defense Authorization Act. There are several parts of the rulemakings to date that 

FinCEN produced in a way that captures both the plain text of the 

law and the purpose for which it was intended. We believe the definitions are true to the statute and consistent with emerging global 

norms. The exemptions were tailored to avoid unintended gaps or 

loopholes that bad actors might exploit. However, I will highlight 

at least five provisions in the proposed rules that raised substantial 

concerns. 

First, the proposed rule invents significant new barriers to access 

by State, local, and Tribal law enforcement that have no basis in 

the CTA. Such requirements were considered and rejected by congressional drafters, as the requirements would create new obstacles 

to investigations without any clear benefits. 

Second, FinCEN’s additional requirements for foreign access also 

have no basis in the text of the CTA. It would create an unnecessary double standard and will result in significant practical barriers for trusted allies. 

Third, restrictions on the use of the information by financial institutions exclude them from using the information for the entire 

range of AML checks. Without fixing this, the database as a whole 

may prove simply nonfunctional to the thousands of financial institutions across the United States. 

Fourth, while thankfully withdrawn, a proposed reporting format 

included a checkbox for filers to include the information was unknown. Such a box would, at best, confuse reporting companies as 

to their obligations under the law, and at worst, provide opportunities for evasion. 

Fifth, the database will only be as useful as it is accurate. Automated, real-time verification of beneficial ownership information 

would provide a minimum level of assurance that the information 

is accurate and reliable. FinCEN must better communicate what it 

needs to adequately verify the information. 

We join in some of the frustration felt by many in this committee 

regarding the delays in the finalizing of CTA rules. However, myriad threats to national security and global security demand a 

strong, well-resourced U.S. financial intelligence unit. In a 2022 report, my organization found that FinCEN’s budget and staffing levels were similar to that of its counterpart in Australia, a country 

with an economy one-fifteenth the size of the United States. There 

is a powerful argument that additional funds are needed for 
11 

FinCEN to fully and effectively do what we asked the bureau. If 

an increase in general funding for FinCEN is not possible at this 

time, perhaps agreement on targeted funding is achievable to address the mutually-agreed-upon frustrations discussed at this hearing. The importance of setting up the database, establishing proper 

verification systems, and education and outreach to key stakeholders are areas where members have found common ground. 

Thank you for the opportunity to share my views at this hearing, 

and I look forward to working with this committee to address these 

important issues. 

[The prepared statement of Mr. Kalman can be found on page 36 

of the appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Kalman, and I thank 

all of the witnesses for their testimony. Excellent job. All of you finished within 5 minutes, so thank you for that. 

We will now turn to Member questions, and the Chair now recognizes himself for 5 minutes for questions. 

Mr. Selenke, welcome. I know you are the banker of the group, 

and you are the one who is going to have to implement these new 

rules from the FinCEN folks. How does it feel being an employee 

of FinCEN? 

Mr. SELENKE. Mr. Chairman, I do appreciate this statement. As 

a bank representative, we want to do what we can to support, and 

it is a challenge right now. As you said, it is a challenge right now. 

Chairman LUETKEMEYER. I know it is frustrating. You are basically deputized here to collect information for law enforcement purposes, and you are not a law enforcement officer. You are a banker. 

You are hoping to help people grow their personal finance or their 

businesses, in this situation businesses, and yet you are in the middle of this law enforcement situation, so it has to be frustrating. 

Has FinCEN talked to you at all with regards to how they are 

going to roll this out, what kind of rules and regulations, or are you 

still in the dark? 

Mr. SELENKE. Chairman Luetkemeyer, we currently have not 

seen any information on how to roll it out and what information 

will be needed. 

Chairman LUETKEMEYER. Less than 6 months to go, and we are 

still in the dark. Is that what you are saying? 

Mr. SELENKE. That is correct. 

Chairman LUETKEMEYER. Okay. 

Mr. Richards, you talked a lot about the goings on of FinCEN. 

Why are we less than 6 months from rolling this out and still not 

there? Is it that they want to minimize our ability to have oversight? Are they trying to delay it? Are they just incompetent? Are 

they just not capable of rolling these rules out, or what is the problem? 

Mr. RICHARDS. Mr. Chairman, I don’t know what the problem 

might be, and I said in my testimony that if it was a funding issue, 

they would be doing the opposite of what they are currently doing: 

simple rules, getting them out, communicating properly. It remains 

a black box and a mystery as to what they are doing and what they 

are not doing, and they are simply not communicating. 
12 

Chairman LUETKEMEYER. So, everybody is in the dark here in 

more ways than one. I’m very concerned about the compliance on 

this. 

Mr. Kuhlman, I think in your verbal testimony you made mention of the fact that we have over 32.6 million small businesses. 

The result of this regulation is staggering: $22.7 billion the first 

year, $5.6 billion moving forward for compliance. That is staggering. Did FinCEN, or our Congressional Budget Office (CBO), or 

anybody do a cost-benefit analysis on this rule before it was issued, 

to your knowledge? 

Mr. KEVIN. It is a whole new universe, right? We are using State 

definitions for Federal law, limited liability companies, corporations, or similar entities, which is pretty vague, and CBO estimated 

25 to 30. FinCEN’s estimates have increased every time they have 

put out an estimate. And it is just because it is a new world, nobody really knows, and until we either eliminate certain businesses, sole proprietors, or partnerships, or say that they are in, we 

are still in ambiguity at this point in time and uncertainty. There 

have been some estimates. They have been kind of all over the 

place, but they have only increased over time. 

Chairman LUETKEMEYER. Okay. You are an advocate for small 

businesses. What is a better way to do this? If you were designing 

a program, how would you do it? Rather than have the banks be 

the collector of information, would it be simpler for FinCEN to 

come to the bank and say, we have a problem with a certain business, and right now, the process is we will get a warrant, go to the 

bank, and get the information? What is wrong with that process? 

Mr. KEVIN. Right. Historically, it has been targeted at banks or 

real estate transactions, and it has had some sort of protection 

with a subpoena for an investigation, so there has been kind of 

this. The criticism, as I understand it from financial institutions, 

is you have a big haystack, and you are looking for needles, and 

it may not be impactful. My criticism of this regulation is you are 

just making that haystack even bigger and trying to find those 

same needles, so I have a more targeted approach. I think it would 

be better if you do something—I thought Congressman French 

Hill’s idea of updating the employer identification number form, 

the Form SS-4, would have been better, a little bit more protected 

at the IRS, but we have what we have now. 

Chairman LUETKEMEYER. To me, this is like, for instance, if 

FinCEN is going after somebody who is making bombs, and they 

use fertilizer to make the bombs, you go to the hardware store, and 

every time somebody buys fertilizer, you have to send the information to FinCEN. This is how over-the-top this situation is. People’s 

private information, businesses’ private information is going to be 

on a government server, and the government has proven over and 

over again that it cannot be a good steward of that information. 

This is nuts. 

I will yield back the balance of my time. The ranking member 

of the full Financial Services Committee, the gentlelady from California, Ms. Waters, is recognized for 5 minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman. I am directing this question to Mr. Kalman and Mr. Selenke. You have both 

described a number of serious deficiencies in the notices of pro-
13 

posed rulemakings related to the Corporate Transparency Act. 

Would these problems with the draft rulemaking text be solved by 

reducing FinCEN’s budget from the $229 million requested by the 

Biden Administration for Fiscal Year 2024, to only $166 million, 

the astonishingly-low amount provided by House Republicans in 

their recently-marked-up Financial Services and General Government Appropriations bill, Mr. Kalman? 

Mr. KALMAN. Thank you, Ranking Member Waters, for the question. I think we have seen that FinCEN—from the report that my 

organization did and some other places—is, in our mind, underfunded. I do think that the rulemaking process would certainly not 

be helped by a budget cut. I am not convinced that the rule 

writing’s problems are necessarily funding-related, although to the 

extent that they are also trying to build the database at the same 

time and make sure that the rules in the database and the filing 

systems are all working in sync, then that would be a funding 

issue, and to make sure that they are able to have the resources 

to build the database and make sure that it all matches and it will 

be a seamless implementation. I do believe that for the database 

and for very specific pieces of this rulemaking process, the funding 

is necessary. 

Ms. WATERS. Mr. Selenke, the question is, what do you think about the fact that the Biden budget was $229 million requested, 

and the Republicans have marked up legislation that would only 

provide $166 million? That is an astonishingly-low amount that is 

provided by House Republicans in the recently-marked-up Financial Services and Central Government Appropriations bill. What do 

you think about that cut? 

Mr. SELENKE. Congresswoman Waters—— 

Ms. WATERS. I can’t hear you. 

Mr. SELENKE. I apologize. There we go. Congresswoman Waters, 

I apologize. From a banking perspective and my perspective as a 

BSA officer, I really don’t have an opinion on that one because our 

experience with FinCEN has been very helpful for us, and I don’t 

think I am in a position to really speak to that. 

Ms. WATERS. I would not expect you to know about the exact 

amounts that would be needed, but the question becomes, do they 

need substantial, credible resources in order to take care of the 

problem of the deficiencies in the notices of proposed rulemaking 

related to the Corporate Transparency Act? Do they need personnel 

to do that? Do they need staff to do that? Do they need money to 

do that, and does it seem curious to you that the Administration 

would ask for $229 million, only to be responded to with $166 million? Do you have any thoughts about that? 

Mr. SELENKE. Yes. Congresswoman Waters, I will say in concurring with Mr. Kalman, as he said earlier, I think there is room for 

discussion in where efficiencies can be found. As you said, the resources are needed, and that determination is to be made. 

Ms. WATERS. Could I conclude this by saying that resources are 

important, and they are needed in order to do the job? Does that 

make good sense? 

Mr. SELENKE. Congressman Waters, that would be an accurate 

statement. 

Ms. WATERS. Would you agree with that, Mr. Kalman? 
14 

Mr. KALMAN. I certainly would. 

Ms. WATERS. Thank you. I yield back. 

Chairman LUETKEMEYER. The gentlelady yields back. The gentleman from the great State of Texas, Mr. Williams, who is also the 

Chair of the House Small Business Committee, is recognized for 5 

minutes. 

Mr. WILLIAMS OF TEXAS. Thank you, Mr. Chairman, and welcome 

to all of you. My main concern with FinCEN’s additional beneficial 

ownership reporting requirements is the immense burden these increased requirements will have on small businesses, many small 

businesses, of which I am one in Texas. Owners are facing higher 

costs and possible penalties for this rule coming out of FinCEN, 

which is a bureau not all businesses are familiar with. There are 

over 32 million small businesses in the United States, yet FinCEN 

has not laid out a strategic plan to inform business owners of how 

they can be sure they are reporting all the correct information. 

I want to thank the chairman for attaching my bill to today’s 

hearing, the Small Business Working Group Act, which will provide an opportunity for small businesses to learn about beneficial 

ownership and promote coordination between FinCEN and Main 

Street America. We need to give small businesses the opportunity 

to learn the rules of the road, and let them comply with what exactly all this information means and entails. 

Mr. Kuhlman, what conversations have you had with FinCEN regarding beneficial ownership reporting requirements, and do you 

feel as if their outreach to small business regarding this rule has 

been sufficient? 

Mr. KUHLMAN. We had one conversation with FinCEN in the 

summer of 2021. I believe it was after they put out their advance 

notice of proposed rulemaking, but before they put out any of the 

first two proposed rules. We have filed comments at every opportunity we have had, but we have had no subsequent conversations. 

And I am afraid you are right, that many of the impacted businesses are unprepared or unaware of the requirements that are 

forthcoming. 

Mr. WILLIAMS OF TEXAS. Yes, we need the rules to play by the 

rules. 

Mr. KUHLMAN. Absolutely. 

Mr. WILLIAMS OF TEXAS. Secondly, throughout 2022, more than 

2,000 people died from fentanyl in Texas alone, which is more than 

5 people per day. Trafficking of fentanyl and its ingredients is conducted by a wide range of Chinese criminal actors. Organized crime 

networks, like those used by the Chinese, can operate outside of 

local jurisdictions through the establishment of shell companies, 

and these shell companies serve as a front for drug trafficking operations. The congressional intent for the CTA was to strengthen 

national security by providing tools to identify all shell companies 

used for money laundering, drug trafficking, and terrorist financing. I have some concerns about the direction the BOI rulemaking 

is taking and the impacts it will have on national security if it is 

not implemented correctly. 

Mr. Richards, given your impressive career in combating financial crimes, how can an effective BOI rulemaking help law enforce-
15 

ment stop money laundering, and how has FinCEN misinterpreted 

congressional intent in their current BOI rulemaking? 

Mr. RICHARDS. To your first question, Congressman, nothing in 

the beneficial ownership rule is going to stop money laundering or 

fight financial crime unless the information gets into the hands of 

law enforcement, and then law enforcement can take action on it. 

That is the most critical thing. Again, there is nothing in the rulemaking that compels that information to be used. Now, there are 

provisions in the AML Act which require the Department of Justice 

and the Government Accountability Office (GAO) to do some studies on the effectiveness of the BSA reporting, but without that, we 

are not going to succeed. 

Your second question was around how far FinCEN strayed from 

congressional intent. I believe they did it in at least four ways. 

First, they created a regime where there are three rules instead of 

two. I think the plain reading of the AML Act and the Corporate 

Transparency Act calls for two rules, and three rules might be like, 

what is the difference at the end of the day? The difference is that 

three rules adds a level of complexity and time because of the rulemaking process that we don’t really have. That is one of the resources FinCEN hasn’t talked about is time, and they are running 

out of time. 

The three other areas where I believe FinCEN went beyond congressional intent is having multiple control persons. There is not 

a law enforcement officer in the world who has ever burst into a 

room and said, how many of you are in charge? They walk in and 

they say, who is in charge, and yet, that is what the CTA impliedly 

called for, and yet FinCEN has said, no, we can have multiple control persons. That is beyond congressional intent and adds a level 

of complexity that is not needed out of the gate. 

Third, is having the images of the identification documents. I 

think that is a stretch. It might be valuable 2 years down the road 

once FinCEN has sort of tested and piloted this process. But doing 

it out of the gate, I think goes beyond congressional intent and 

adds a level of complexity that is not needed. 

And finally, and Mr. Selenke talked about it, is the limited use 

of the beneficial ownership information. I apologize for the long answer. 

Mr. WILLIAMS OF TEXAS. Thank you. I yield back. 

Chairman LUETKEMEYER. The gentleman yields back. I now recognize the ranking member of the subcommittee, the gentlelady 

from Ohio, Mrs. Beatty, for 5 minutes. 

Mrs. BEATTY. Thank you, Mr. Chairman. Let me start with you, 

Mr. Kalman. We have been talking a lot about rulemaking, and I 

believe you were part of the bipartisan Corporate Transparency 

Act, which took over 10 years to pass. It is my understanding that 

you met with Members and staff frequently in support of that process to talk about the practicalities about how the law was ultimately shaped. Can you talk a little bit more about how important 

this legislation was, and the prevalence of the use of shell companies to laundering money, and how pivotal this legislation was to 

protect our national security? 

Mr. KALMAN. Thank you for the question. It did take over 10 

years. I believe it was 12 years since Senator Carl Levin first intro-
16 

duced the bill. It was negotiated with numerous amendments and 

different versions of the bill through several Administrations. During those years, I think there was more and more evidence that 

came to light, that I think helped move the process forward, and 

that showed it was really, truly, a national security issue. 

Let me just give one example, and I don’t want to take too much 

time, but I think one of the early examples that was pretty shocking to this committee and to others was when we discovered that 

the Iranian Government had bought an office tower on Fifth Avenue in Manhattan to evade our sanctions. And just think about 

that: The easiest way for Iran to evade our economic sanctions was 

to buy property in New York. I think that says a lot about the use 

of anonymous companies and how they can help to circumvent our 

efforts at national and global security. 

Mrs. BEATTY. And even with that, Mr. Kalman, I think what is 

important for me, because we are in a new era of time with 

FinCEN, and we all have some questions about what is the intent 

of the Congress, but I think the operative thing for me, in addition 

to that case, was the bipartisanship and the broad coalition of 

stakeholders. Here we are again talking about FinCEN. Can you 

talk about that bipartisanship? 

Mr. KALMAN. I think that was one of the things that helped move 

the legislation forward. 

Mrs. BEATTY. Can you say that part again? 

Mr. KALMAN. I think that the bipartisan, across-the-politicalspectrum support for the bill was what helped move it forward and 

helped Members to understand the value. We had think tanks on 

both the right and the left. We had, at the end, the Chamber of 

Commerce come aboard, as well as having a number of environmental groups. The banks were a good partner with consumer 

groups. We had law enforcement and civil rights organizations, a 

number of organizations that you don’t normally see on legislation 

at the same time. I think that was a critical and, I hope, a good 

reminder to the committee about how this moved forward. 

Mrs. BEATTY. Thank you. Our strength is certainly within our 

unity. Let me shift with the few minutes I have left. We have 

heard a lot about small businesses. I, too, for more than 2 decades 

served as a small business in my district, and there are a lot of 

concerns about these reporting requirements. And I am sensitive to 

regulatory changes that will impose burdens and compliance costs 

on small businesses. Can you give us a sense of projected compliance costs for small businesses, or do you have any data on estimates for this, or does anyone else? 

Mr. KALMAN. I will just offer, and then if others have—the only 

practical experience, I think, that was looked at, that we saw was 

in the United Kingdom after they passed their law, and they looked 

at various businesses and how much it costs. And I think the initial cost for average small businesses—they define those as businesses with less than 50 employees, and ours is less than 20 employees—was about, I believe, $150 the first year, and then the annual sort of upkeep cost self-reported by businesses came out to be 

2 pounds, which would be about $2.50 a year. 

While we do appreciate that this is something that businesses 

have to pay attention to, and it is another regulation in a lot of reg-
17 

ulations, we don’t think this particular regulation is actually going 

to cost a significant amount of money. 

Mrs. BEATTY. Okay. I probably don’t have enough time for you 

to answer, but my last question is going to be to everyone, if there 

is anything concrete that Congress can do to help FinCEN further 

ease business compliance, but you can send your responses in writing. Thank you. 

Chairman LUETKEMEYER. The gentlelady’s time has expired. 

With that, we go to the gentleman from Kentucky, Mr. Barr, who 

is also the Chair of our Subcommittee on Financial Institutions, for 

5 minutes. 

Mr. BARR. Thank you very much, Mr. Chairman. This is an important hearing, and I really appreciate the witnesses’ testimony 

about FinCEN’s overreach here. I am worried about FinCEN’s significant deviation from congressional intent. I just spoke to the 

Kentucky Bankers Association, and they are concerned that their 

customers don’t understand what is coming. They don’t understand 

Section 1071 on that data collection, and they don’t understand 

what is about to hit the small businesses with this CTA, and, 

again, definite deviation from congressional intent when finalizing 

and implementing the BOI reporting rule, and that will mean trouble for small businesses’ ability to comply. 

The CTA states that reporting from existing companies needs to 

be conducted no later than 2 years after enactment, yet the 

FinCEN final rule requires reporting 1 year from finalization of the 

rule. It is one thing that they have 50 questions and 8 pages; it 

is another thing that when no small business knows this is coming, 

they have expedited the timeline. 

Mr. Kuhlman, what does this expedited timeline mean for small 

businesses, and will your members have time to comply? 

Mr. KUHLMAN. For existing businesses that only have the one 

year to comply, most obviously, just half the time that they were 

permitted to do it. But it is also that those businesses don’t know 

that it exists, so it is going to take them time to do it. When are 

they going to be able to meet with their tax professional or whatever is probably in the spring, right? There goes 3 months, and 

then to maybe go back and try to find out who are their beneficial 

owners if it is a multi-generation business or something like that. 

Fortunately, existing businesses don’t have to go back and find 

the applicant, who may be long gone by that point in time, but that 

is a problem. I am even more concerned about the businesses 

formed after the effective date, because they only have 30 days to 

get all this information, and they are basically overwhelmed with 

starting up this business and being stressed at that point in time, 

and they are going to have to track this information down. They 

are going to have to get an employer identification number and taxpayer identified. They might not even have that information in 

time, but this is certainly the last thing on their mind. 

Mr. BARR. Yes, certainly, requirements to disclose things they 

don’t have to in the statute, and I am worried that FinCEN will 

fail to roll out a final rule rescinding the CDD rule forcing a duplicative reporting regime upon the backs of small businesses. 

Mr. Richards, when Congress passed the Corporate Transparency 

Act, were there three separate bills or did we enact just one? 
18 

Mr. RICHARDS. It was the one bill but three separate rules, I 

think is what you are referring to. 

Mr. BARR. Yes. And I’m sorry about the queued question, but you 

anticipated my next question, which is, how did we end up with 

three separate rulemakings with only one statute? 

Mr. RICHARDS. It was a surprise. The section that rolled out the 

Corporate Transparency Act was entitled, ‘‘Beneficial Ownership 

Information Reporting Requirements.’’ It included both reporting 

and access. 

Mr. BARR. Yes. 

Mr. RICHARDS. Another section has GAO and Treasury doing 

studies on the beneficial ownership information reporting requirements. FinCEN’s advance notice of proposed rulemaking was on 

beneficial ownership information reporting requirements, and it included both reporting and access. So when they came out with the 

three-rule approach instead of the two-rule approach, I think it 

took everybody by surprise 

Mr. BARR. And do three separate rules lend themselves to creating a simple, straightforward reporting regime? 

Mr. RICHARDS. No, they add complexity and add time. 

Mr. BARR. I share our chairman’s sentiment that Ms. Gacki will 

be a good addition to FinCEN, and we look forward to working 

with FinCEN and appreciate FinCEN’s offer to come to our districts and help educate our small business community about these 

new requirements. But we look forward to working with FinCEN’s 

new leadership and retooling what they have done here. 

Mr. Richards, final question in my remaining time. Fraud and 

other forms of criminal behavior are on the rise. Your bank customers have been educated, in part to be careful with whom they 

share their sensitive personal information, and in part to protect 

them against fraud and exploitation. Do you anticipate that the 

customers are going to require education from FinCEN to feel comfortable sharing the sensitive personally-identifying information 

with FinCEN, in addition to giving your bank written consent in 

order to access the beneficial ownership registry? 

Mr. RICHARDS. Absolutely, and that is the one thing that the 

businesses don’t know is how to do this. They don’t know how to 

do it. I am a small business. I know a little bit about this stuff. 

I know I am not going to be registering until about November because I want to make sure that this database is secure. 

Mr. BARR. Yes, and, Mr. Richards, excellent point about none of 

this is going to advance the cause of law enforcement, anti-money 

laundering, countering terror finance or national security. None of 

it is going to advance any of those things if it doesn’t get into the 

hands of law enforcement. This is the frustration, frankly, with a 

lot of my small community banks related to Currency Transaction 

Reports (CTRs) and Suspicious Activity Reports (SARs) is that they 

never get any feedback. Is this helping or not? With that, I yield 

back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. We 

will now go to the gentleman from North Carolina, Mr. Nickel, for 

5 minutes. 

Mr. NICKEL. Thank you, Chairman Luetkemeyer and Ranking 

Member Beatty, and thanks to our witnesses for being here. The 
19 

Financial Crimes Enforcement Network, or FinCEN, is our country’s financial intelligence unit, meaning it is providing intelligence 

that helps the U.S. to achieve its national security objectives. This 

includes intelligence used to track, seize, and freeze Russian oligarch funds that are fueling the war in Ukraine and funds used 

to traffic Chinese fentanyl. 

My colleagues across the aisle have proposed cutting FinCEN’s budget, rolling back the Fiscal Year 2024 appropriation to $166 

million, which is $63 million below the Administration’s budget request. With fewer resources, FinCEN will have a harder time supporting such national security and law enforcement inquiries while 

moving forward on structural reform to strengthen the U.S. financial system against illicit funds. 

Mr. Kalman, if we cut funding for FinCEN, what are the potential negative consequences to our ability to fight financial crime? 

Mr. KALMAN. Thank you for the question. There are many impacts. Let me just say this one, which I think we all agree on this 

panel, is that one of the key things, one of the most important 

things about getting this right and making sure that it is effective, 

is if the data is verified, if we know that the information that is 

in the database is accurate. We have heard from Mr. Selenke that 

if it is not accurate, they won’t find it useful and won’t use it. 

Verification costs money. They need licenses to access other databases. They need to be able to make sure that their systems are 

compatible. That takes a lot of money, and that is not currently in 

FinCEN’s budget. So, we think that in general, they need more 

money, but specifically, if this rule is going to work, they need to 

have that targeted funding. 

Mr. NICKEL. Mr. Kalman, how would the Republicans’ proposed 

budget cuts impact FinCEN’s ability to engage with stakeholders 

of the Corporate Transparency Act to ensure that the small business community can more easily and accurately comply with these 

new rules? 

Mr. KALMAN. FinCEN does need to be able to reach out to a 

number stakeholders. The small businesses have been mentioned 

before. That is critical, making sure that they can pick up the 

phone and answer questions from the banks once the financial institutions have to engage in this rule. They also have to deal with 

the Secretaries of State and others that have corporate formation 

at the State level to make sure that it is as seamless as possible 

when businesses do go to register a business. And that outreach is 

going to cost money and take additional personnel. 

Mr. NICKEL. I have some more questions, but Ranking Member 

Beatty was on to something that I wanted to hear from everyone 

on the panel on; I thought it was a great question, so I want to 

just take her question and pose the question to all four of you. Is 

there anything concrete that Congress can do to help FinCEN to 

further ease business compliance? 

Mr. SELENKE. Congressman Nickel and Congresswoman Betty, I 

think the original intent of this rule was to create something that 

was simple, accurate, and accessible, especially to law enforcement 

as well as to financial institutions. And I think ensuring that request or that expectation is completed is what Congress can assist 

in. 
20 

Mr. NICKEL. Mr. Richards? 

Mr. RICHARDS. I will repeat that. Congress can help FinCEN 

help itself by keeping things simple, by easing the burden on financial institutions, particularly expanding their ability to use this information for all purposes, including investigating and reporting 

suspicious activity and encouraging law enforcement to use it. I 

think you just have to work with them, and under the new Director, I think that is very, very possible. 

Mr. NICKEL. Mr. Kuhlman? 

Mr. KUHLMAN. Yes. I think revisiting some of the definitions, as 

Mr. Richards mentioned, that substantial control was supposed to 

be one person. FinCEN, as an example, listed up to 8 people. So, 

looking at definitions, ‘‘beneficial owner,’’ ‘‘substantial control’’— 

perhaps limiting those, perhaps limiting or eliminating the, ‘‘or 

similar entities,’’ from LLC and corporation because that has kind 

of been wide open and expansive as well. And then, taking a look 

at the timeline—I believe Congressman Nunn has a bill that goes 

back to the original timeline. 

On the comment on the bipartisanship earlier, I tend to agree 

that the bipartisanship did give kind of those expanded timelines, 

and a lot of that bipartisanship was just eliminating the regulation 

when they were just limited to more restrictive than anything that 

was suggested in earlier pieces of legislation. 

Mr. NICKEL. Thank you, and I yield back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. The 

gentleman from Georgia, Mr. Loudermilk, is recognized for 5 minutes. 

Mr. LOUDERMILK. Thank you, Mr. Chairman, and thank you all 

for being here today for this very important hearing. And before I 

start with my questions, I want to touch on something that Representative Barr actually touched on, with the current regulations 

dealing with the Bank Secrecy Act. Before I get into that, I think 

the big issue that most of us are looking at is that Congress was 

very intentional when we drafted legislation for FinCEN, and it 

seems like FinCEN has ignored most of those guidelines in the 

final product. 

Mr. Chairman, without objection, I would like to insert a letter 

from the National Association of Manufacturers, which highlights 

multiple areas where FinCEN has subverted or exceeded congressional intent and rulemaking, and has put thousands of small businesses at risk of incompliance. 

Chairman LUETKEMEYER. Without objection, it is so ordered. 

Mr. LOUDERMILK. And with that—I wanted to make sure to get 

that out of the way—I want to go back to what Mr. Barr talked 

about with SARs and CTRs. Even though this is about beneficial 

ownership, I am working on legislation to modernize the Currency 

Transaction Reports and Suspicious Activity Reports. 

Mr. Selenke, I heard that you have a unique perspective on the 

issue, and I was hoping that you would maybe briefly share your 

thoughts on raising or simplifying the thresholds for those reports. 

I come from an intelligence background in the military, and there 

are a couple of issues I see with CTRs and SARs. One, the threshold is so low on CTRs that if we were to adjust it for inflation, we 

would go from the 1970s $10,000, to over $80,000 today. But be-
21 

cause we are overwhelming the system with information because of 

the CTR threshold being so low, and the lack of clear definition on 

what is a suspicious activity, we find that banks, to avoid making 

mistake or having someone come after them, will just report most 

anything. So, what happens to law enforcement is like looking for 

a needle in the haystack. I want to reduce the haystack so we get 

to the information. 

The second is the Federal Government becomes the biggest data 

risk of anybody in the United States. So, you have all of this financial data that is sitting in a database that most people are not 

using but becomes subject to disclosure, and so, again, if you could 

enlighten us with your ideas and thoughts on this? 

Mr. SELENKE. I appreciate the question, Congressman 

Loudermilk. Two things. First, we will address CTRs. The dollar 

amount, I think, is a good question. I think when it first came out 

in the early 1970s—I remember my parents’ first house was 

$13,000, so it gets a feel for the size and scope of that. But from 

a bank’s perspective, the thing on the CTRs that would help most 

is to simplify the process. 

As a bank, we really do use exemption. If a customer regularly 

comes in, we will get it so that they are able to not have to fill out 

the paperwork. The challenge with that is, by regulation, for a 

number of those businesses, I cannot exempt them, so it is a very 

complex form. The CTR form has a lot of information. I have four 

people on my staff whose entire job is to take care of CTRs. If there 

was a way to simplify that process to get the information that they 

need for law enforcement, it would make a big difference to our 

banking institution and banks in general. 

The second part you asked about is SARs, and the challenge with 

SARs is if I was able to create the rules, I would somehow bifurcate 

those SAR filings. Some SAR filings may be for, I am getting ready 

to buy a boat. I heard somewhere in the background, my uncle said 

I can’t take out more than $10,000, so I will take out $9,000 today, 

and $9,000 tomorrow. I look at it. I see the money came from a Fidelity account or an investment account, and they are taking the 

cash out, and they told the teller they are buying a boat. I have 

to fill a SAR out on that. It takes the same number of boxes, et 

cetera, and it piles onto that pile of SARs, whereas if there is something that is more serious, that same boat dealer who was structuring the conversations, that is information that I would want to 

put on a SAR. 

If there was a way to simplify the SAR so that information going 

to law enforcement wouldn’t be, like you say, more haystacks and 

less needles to be able to have more needles and less of a haystack. 

Mr. LOUDERMILK. Thank you. And even though this is about beneficial ownership, I see that there is some connection there, and 

that was very beneficial to me in where we are going. I am running 

out of time, so I will submit the rest of my questions for the record 

regarding beneficial ownership. 

But I will close with this one thing that always strikes me with 

all the information that we are getting from CTRs and SARs. If my 

local sheriff wanted to get that information from a financial institution, he would have to have a search warrant. If the FBI wants to 
22 

get it, they just go to FinCEN, and it is there. With that, I yield 

back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to the gentlelady from Colorado, Ms. Pettersen, 

for 5 minutes. 

Ms. PETTERSEN. Thank you, Mr. Chairman. Mr. Kalman, in this 

committee and across Congress, we are very interested in the issue 

of fentanyl trafficking and how we can detect and deter these bad 

actors. Your organization, Transparency International U.S., developed a fact sheet that includes 10 examples of how traffickers of 

synthetic drugs have used shell companies to facilitate their operations and launder or hide their illicit proceeds. 

I would like to submit this document for the record. 

And 10 examples among probably hundreds or even thousands 

were given here. We can add to that the human traffickers using 

shell companies to harm men, women, and children, arms traffickers, sanctions evaders, and many others who abuse our financial system through these anonymous shell companies. 

So, Mr. Kalman, how would law enforcement use this database 

to better pursue these bad actors, and can you tell me how FinCEN 

can revise their proposed CTA access rule to better support such 

efforts? 

Mr. KALMAN. Thank you for the question. There are two parts to 

the question. First, how does law enforcement use this information? 

Let me give you one specific example. There was a study done by 

the anti-human trafficking organization, the Polaris Project, a few 

years ago. They looked at 6,000 illicit massage businesses across 

the United States where they suspected women were being trafficked. They found in only 21 percent of the cases was anyone listed on the form, which meant that you had almost 80 percent of 

these businesses having no ownership, so they could not arrest the 

people who were behind the trafficking. They could only arrest the 

women who were being trafficked, which seems backwards to us 

and imperfect justice, if you will. 

If there was beneficial ownership information and people were 

required to file, they could look at that information, and they could 

actually go back to the people who are behind the trafficking operations. We believe that the way in which FinCEN has created the 

access rules for State and local law enforcement creates unnecessary hurdles, is not in the text of the law and, in fact, goes beyond 

what was a very carefully-negotiated compromise in making sure 

that there were security protections of the data but also allowing 

access to the data by law enforcement. So, we think that they need 

to update that rule. That is probably, for us, the most important 

piece of the problem. 

Ms. PETTERSEN. Great. Thank you so much. Another concern 

that we have heard is the cost to our businesses, the barriers and 

the burdens on businesses; 82 percent are nonemployer businesses, 

so this would really just be registering the information that they 

have readily available. For the remaining ones that are not just 

nonemployer, they have to collect the information. On average, we 

have seen in Britain that it costs, on average, $250 for companies 

like that, but for many, it is zero dollars, and for the next year, it 

is only around $2. It seems like this is a very important investment 
23 

up front to make sure that we are going after these bad actors that 

are not utilizing our financial system. 

Is there anything, since Britain has gone years ahead of us on 

this, that you can point to on their success and why it is important 

to continue to move forward, making sure that it works for law enforcement? 

Mr. KALMAN. My apologies. As you noted, the vast majority of 

businesses are small, single-owner, nonemployer firms. When we 

were talking to our U.K. colleagues, they noted that it is sort of an 

interesting statement to say that those who can create the complex 

structures, that can afford the lawyers and the service providers 

that can create a web of companies that makes it difficult to know 

who owns it, then don’t have the same money to be able to hire 

those same lawyers to figure out who is on the top of the corporate 

food chain. 

We don’t think that is actually true and we would challenge that, 

and during the entire debate, we have never actually heard anybody come up with an actual real-life example of that. We do think, 

again, it is a requirement for businesses, but we think that for the 

vast majority, it is a very simple thing, and for those that are more 

complex, they have proven that they can afford it. 

Ms. PETTERSEN. Thank you so much for being with us today. I 

yield back. 

Chairman LUETKEMEYER. The gentlelady yields back. The gentleman from Pennsylvania, Mr. Meuser, is recognized for 5 minutes. 

Mr. MEUSER. Thank you very much, Mr. Chairman. And thank 

you to our witnesses as well. It does seem as if we, on this committee, are a broken record. We are meeting with those where rules 

from the Biden Administration agencies continue to go beyond congressional intent, are out of scope, and overburden businesses, particularly small businesses and the banks that serve them. Beneficial ownership rule from FinCEN is no exception. 

We expressed similar concerns with the Consumer Financial Protection Bureau’s (CFPB’s) Section 1071 small business data collection rule whereby they had to contract out reporting requirements, 

which required some very odd data at great cost to them. So, 

FinCEN should have considered ways to minimize reporting requirements for small businesses that are already strapped with so 

many other unfavorable factors. FinCEN also needs to take a step 

back, delay implementation of their rule, and think critically about 

ways to move forward with Anti-Money Laundering/Bank Secrecy 

Act compliance in a way that is truly beneficial to stakeholders. 

My line of question is going to focus initially on small businesses, 

which are often caught in the crossfire of such rulemakings, so, Mr. 

Kuhlman, I would like to just start with you. To your knowledge, 

did FinCEN reach out to small businesses regarding how beneficial 

ownership rulemaking should be done in a reasonable manner for 

small businesses? 

Mr. KUHLMAN. There has been very little outreach thus far. I 

think this year, there has been a FAQ document that has been put 

on the website, and that is the only update that I have heard. 

Mr. MEUSER. And how many members in NFIB exist that would 

fall under this mandate of rulemaking? 
24 

Mr. KUHLMAN. Eighty percent of our members, so about 240,000 

of the 300,000. 

Mr. MEUSER. 240,000. 

Mr. KUHLMAN. Our reach is only that far, and maybe not even 

that far, right? We got 32.6 million reports. 

Mr. MEUSER. I think that maybe there would be a conversation 

to get a little bit of input, right? 

Mr. KUHLMAN. Yes. 

Mr. MEUSER. Does the information requested by the FinCEN reporting form, in your view, go beyond the original intent of Congress and the Corporate Transparency Act? 

Mr. KUHLMAN. Yes, I think that the definitions are too broad. 

The fields are more expansive than whatever. As I said, if you copied and paste it from Regulations.gov, it is 8 pages, but I think 

AICPA or someone put together this form, which is on legal for columns. This is going to cost you more than $40 or $250 to update 

every time. If a business owner sees this form, they are going to 

go to a CPA or an attorney to seek their advice. 

Mr. MEUSER. And I imagine this is not your opinion. You are actually getting feedback from your members, and they are stating 

that this can be problematic for them? 

Mr. KUHLMAN. Correct. The members as well as their advisors or 

tax professionals, and they all agree. 

Mr. MEUSER. Okay. About how many of your members feel comfortable filing beneficial ownership paperwork before January 1, 

2024? 

Mr. KUHLMAN. I don’t know. I don’t know of any. But I guess my 

analogy is when the customer due diligence rule became effective 

on May 11, 2018, I did get an influx of members who said, what 

is this form? I am not comfortable filling this out. And that had a 

protection it had to stay on file at the financial institution and subpoena protection. This does not. It just goes into a giant database. 

Mr. MEUSER. As we move forward, give us feedback, not just at 

this hearing, about what you are hearing as well from your members, if you can do that. 

Mr. KUHLMAN. Yes, sir. 

Mr. MEUSER. Mr. Selenke, I would like to move on to you, please, 

on how this ruling will affect banking. Why don’t you just go ahead 

and give me some of your thoughts on what community banks, regional banks, super regionals, what their thoughts are on this rule? 

Mr. SELENKE. Yes. Congressman Meuser, I appreciate the question. For the mid-sized banks like myself and larger, the rule, as 

it is currently put out there, will be additive to our process. As 

many regulations tend to be, it could be a distraction, and focusing 

on this particular form, we may lose focus otherwise. Where I am 

more concerned for the banks and for the small business customers 

is smaller community banks in the State of Missouri—according to 

the Missouri Bankers Association, many of those banks have 2 

branches, 20 employees, and $200 million on deposit. Their ability 

for their BSA officer, who is also their compliance officer, worrying 

about, as you said, 1071 and other rules, is going to be very difficult. For us as a bank, I am worried that it is going to be additive 

and subtract from our ability to properly support FinCEN and BSA 

rules. 
25 

Mr. MEUSER. My guess is that you are contacting FinCEN saying, we need a delay, we need clarity, we need some input here. 

Mr. SELENKE. I think the primary thing would be we need clarity 

and simplicity for our customers and for our banks. 

Mr. MEUSER. Thank you very much. Mr. Chairman, I yield back. 

Chairman LUETKEMEYER. The gentleman yields back. The gentleman from Illinois, Mr. Foster, who is also the ranking member 

of our Financial Institutions Subcommittee, is recognized for 5 minutes. 

Mr. FOSTER. Thank you, Mr. Chairman, and thank you to our 

witnesses. I will try again on something that I think could make 

all this stuff work a lot better, get better quality data into the database, and that is mobile ID or digital drivers’ licenses. Are you all 

familiar with this? This is the ability to present a REAL ID-compliant driver’s license, a document that already exists, that is issued 

by all the States, and present that in a pretty fraud-resistant way 

using your cellphone, and to take advantage of the fact that a modern cellphone can be used basically as a biometric security dongle. 

Mr. Selenke, when someone wants to come in and open a bank 

account, you have to do your Know Your Customer (KYC) on him. 

The customer gets out the cellphone, does the biometric login, then 

verifies that is the cellphone that was associated with the digital 

driver’s license, which is a document that is pretty hard to fake. 

It is hard. A REAL ID-compliant driver’s license is something 

where it is hard to get multiple licenses in multiple States, which 

is the root of a lot of identity fraud. So, if you can simply present 

that document that already exists in State databases with the biometrics, and if you can present that online or in person, it simplifies the heck out of this process. 

In countries that have this, when you want to register a company, one of those steps is to get out your cellphone and prove that 

you are who you say you are online. This is also something that 

is going to be absolutely crucial when you are looking at artificial 

intelligence deep fakes that we are going to have. Just there is 

going to be a wave of identity fraud coming at us, so this will be 

an essential tool for that. 

In the last session of Congress, we got within one Member of 

Congress in finally getting the government at least to accept this. 

But then, because our system allows one Member of Congress to 

throw a crowbar in the works, we were unable to get it in the omnibus at the end, but it is close, and the people of the United 

States, I think, are ready for this. 

The American Civil Liberties Union (ACLU) issued a report that, 

as you would expect, was full of real worries about privacy, but in 

the end, it concluded, if you read the last paragraph of the report 

on mobile ID, that if this is done right, it will be good for privacy 

and good for equity in our country. We made a major step forward 

in breaking the digital divide and within as part of the Infrastructure bill. Now, even someone with no assets has the right to a subsidized internet contract, which is the barrier for this. And I would 

venture to say that of the 35 million companies that you talk 

about, every one of them has a cellphone to a very good approximation. 
26 

The technology for this was developed by the National Institute 

of Standards and Technology (NIST)in the Obama Administration, 

and it is deployed on every one of your cellphones today. We have 

the ability to do this, and if we actually simply allowed the Federal 

Government to set standards for interoperability and for digital 

presentation of this and issuing of these things, it would be a 

game-changer. Simply, if we had allowed it for government operations, if it had been in place at the start of COVID, we would have 

avoided more than $60 billion of identity fraud and taxpayer losses. 

So, this is huge. It is something that, frankly, almost the entire civilized world is ahead of us on—name a country, starting with Estonia and Korea, which I think lead the world, but in the European 

Union, almost every country is doing this. 

And when you want to open a company, you just simply say, 

okay, I want to open my company. You get out your cellphone, 

prove that everyone involved is who they say they are because that 

is a huge issue in getting high-quality data into this. I was wondering if any of you have reactions about that, how much simpler 

that could make things if there was a realistic expectation that 

U.S. citizens who wanted one could have access to a secure digital 

ID? Does anyone want to comment on that? 

Mr. RICHARDS. That would be a leap forward because I think the 

biggest sticking point we are going to see practically are beneficial 

owners that are reluctant to provide copies, PDFs of their driver’s 

license or, on the rare occasion, a passport. So if that replaces 

ID.me.gov or whatever it might be, that would be a step forward 

because, again, that is probably the biggest sand-in-the-gears aspect of the overreach in the rulemaking. 

Mr. FOSTER. Mr. Selenke? 

Mr. SELENKE. Yes, Congressman. From a banking perspective, as 

they say, the devil is in the details, but from a banking perspective, 

if there is an ID that is acceptable and understandable and difficult 

to manipulate, it is something we would be interested in taking advantage of. 

Mr. FOSTER. Yes. No, it is a mobile ID. It is being deployed by 

lots of States. And we should just adopt it federally, and life would 

get easier for law enforcement, and for businesses, and for the average American. Thank you, and my time is up. I yield back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. The 

gentleman from Iowa, Mr. Nunn, is recognized for 5 minutes. 

Mr. NUNN. Thank you very much, Mr. Chairman, and Ranking 

Member Beatty, for holding this hearing, and thank you very much 

to the panel for being here to discuss this. I want to begin, first 

of all, by thanking FinCEN for the wide range that it does. At the 

same time, I am going to speak to my small businesses today. 

[chart] 

Mr. NUNN. I am going to share with the committee this test delete page that was screen-captured. It is the exact page where our 

small businesses are supposed to be trusting their Federal Government is going to be protecting, preserving, and providing for the 

protection of the information that they are offering to FinCEN. But 

this was left live for 5 days, leading us to believe that the technology problems at the institution have been addressed, when 

clearly, they have not. 
27 

I would like to submit the screenshot and the IRS news release 

for the record. 

Chairman LUETKEMEYER. Without objection, it is so ordered. 

Mr. NUNN. The beneficial ownership database was crafted not to 

be public-facing. Unlike U.K. companies, for a reason, this information is highly-sensitive. A misstep could be disastrous for millions 

of Americans and slip-ups like the one I just showcased in here 

could hemorrhage this information, and the lack of a final access 

rule makes me extremely worried about FinCEN’s ability to secure 

data properly, and I think millions of Americans feel the same way. 

Secondly, the IRS released a newsletter to warn taxpayers to be 

on the lookout for a new scam in mailings that tries to mislead people into believing that they are owed a refund. Much of the same 

data the scam letter asked for is what FinCEN will be requiring 

through their BOI rulemaking. FinCEN’s lack of clarity around 

this proposal deeply worries me that they will not be able to ensure 

that similar gimmicks do not stand the test of time. 

That is one of the reasons why we are introducing a bill called 

the Protect Small Businesses and Prevent Illicit Financial Activity 

Act, which does two things I would like to share with the panel. 

First, it would force FinCEN to remove its escape hatch that allows 

companies to check if they are unable to identify or unable to attain determinations. This opt-out that FinCEN is creating will 

allow the very same foreign entities and terrorist organizations 

that we are trying to eliminate to go unchecked, the very reason 

a bipartisan Congress passed the Corporate Transparency Act in 

the first place. 

Second, it would force FinCEN to revert its beneficial ownership 

filing deadline to the agreed-upon deadline by the four corners of 

Congress. For existing small businesses, this would be a statutorily-mandated 2 years from the 1-year extension FinCEN established, and for newly-registered small businesses, this would be 90 

days, which was shortened by FinCEN to only 30 days. I agree 

with Mrs. Beatty that there are a number of loopholes that need 

to be addressed. This is something that a bipartisan group on this 

committee believes is important. 

My bill came as I reached out to my Iowa State Small Business 

Development Center (SBDC), and the State director talked to me 

about the beneficial ownership rules, to which she responded that 

she had not heard anything from several businesses or FinCEN regarding the implementation of the rulemaking. Her response, 

‘‘SBDC being an outreach arm of the Small Business Administration, thus a partner with the government to assist businesses, one 

would think that we would have a great resource to assist them 

with such outreach efforts. If you have concerns with them, please 

encourage them to reach out to our nationwide assets so we can 

begin helping our business clients.’’ That takes us to the task at 

hand. 

Mr. Richards, can you discuss the escape hatch that FinCEN 

would include for entities that may be unable to identify their Taxpayer Identification Number (TIN)? 

Mr. RICHARDS. I cannot explain the escape hatch. It was an absolute surprise to everybody. I think Elise Bean, who used to be a, 

I think, general counsel on the Permanent Subcommittee on Inves-
28 

tigations, called it the worst form she had seen in 40 years of government service. But FinCEN has heard the feedback and has said, 

yes, we have pulled that form back. We are going to look at it 

again. I would expect that if clear heads prevail, there will be no 

ability for a reporting company to choose, ‘‘I don’t know,’’ as an option on the form. 

Mr. NUNN. Or even a reporting company, a foreign entity having 

a shell company that doesn’t want to disclose. Luckily, at this 

point, we are able to protect. Unfortunately, we have seen what 

has happened in the past here, and people have taken advantage 

of it. 

Mr. Kuhlman, what percentage of small businesses would be able 

to comply with this, in your estimation? 

Mr. KUHLMAN. At this point in time, I don’t know of any, because 

they don’t know what the form is. There are still some unclear definitions and there is no guidance, but hopefully, by the end of the 

6 months, there will be some guidance. 

Mr. NUNN. And hopefully, with some clarifying legislation, we 

will be able to do that. How many companies in America right now 

would be able to provide their TIN to the FinCEN team? Would 

you say that the overwhelming majority have a Taxpayer Identification Number? 

Mr. KUHLMAN. Yes, but I would also caution that the Taxpayer 

Identification Number was not required as part of the law. I would 

recommend just sticking to the four required fields. 

Mr. NUNN. I understand. 

With that, very quickly, Mr. Selenke, what does CTA implementation look like for rural banks in places like Iowa and Missouri? 

Mr. SELENKE. It will be very difficult. It is another additive requirement, and with the resources, it would be—— 

Mr. NUNN. Thank you, Mr. Chairman. My time has expired, so 

I yield back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. The 

gentleman from New Jersey, Mr. Gottheimer, is recognized for 5 

minutes. 

Mr. GOTTHEIMER. Thank you, Mr. Chairman, and Madam Ranking Member. Mr. Kalman, while I am happy to see FinCEN make 

progress on rules to implement the Corporate Transparency Act, I 

am concerned by the barriers law enforcement could face, including 

a requirement to obtain a court order before accessing the beneficial ownership directory and reporting requirements after the 

fact. Can you describe how these additional barriers will affect law 

enforcement’s investigations, please? 

Mr. KALMAN. Thank you for the question. During the negotiations for the rule, this committee and others around Congress that 

were involved went through very, very specific negotiations, creating a series of protocols to ensure that there is security of the 

data. Obviously, nothing is perfect, but people felt, at the end of 

the day, that we had gotten to a place where there was some level 

of security. 

The problem with the additional hurdles for State and local law 

enforcement, which don’t exist, by the way, for Federal law enforcement, is quite significant. The information we are talking about is 

often at the beginning of an investigation for law enforcement, and 
29 

if they can’t have access to this initial data, it is very difficult to 

move forward with an investigation. And these investigations can 

be complicated and costly, and they could just get dropped. 

Mr. GOTTHEIMER. Thank you. In March 2022, I joined then-Committee Chairwoman Waters and Representative Sherrod Brown in 

calling for GAO to conduct a review of the tools used by domestic 

violent extremists to finance their activities here in the United 

States. I am looking forward to seeing the results of GAO’s review 

in the coming months, which I hope will shed light on the ways 

these groups fund themselves. 

Mr. Kalman, can you describe the ways in which domestic violent 

extremists, like the Oath Keepers and Proud Boys, could conceal 

their fundraising activities through the use of shell companies or 

other anonymous organizations? Would a strong beneficial ownership directory help law enforcement monitor the activities of these 

groups? 

Mr. KALMAN. We have seen shell companies or anonymous companies, I should say, being used by any number of bad actors, 

whether it is terrorist organizations, human trafficking operations, 

drug cartels, or other organizations. I believe the Stolen Asset Recovery (StAR) Initiative said that it is—no, it was Global Witness 

that coined the phrase that the anonymous companies are the getaway car for criminals and the corrupt. So yes, I think that the 

idea behind the Corporate Transparency Act is, in fact, to require 

companies, shell companies, or those that would hide behind corporate structures, to come clean or not be able to register. 

Mr. GOTTHEIMER. Yes, so you have seen evidence of anonymous 

companies flooding markets with counterfeit products at the expense of U.S. small businesses? 

Mr. KALMAN. Yes. And in my written testimony, we submitted a 

report by David Luna, who is a former national security official. He 

did look at the impact on businesses and the use of anonymous 

companies both for counterfeited and pirated goods, but also companies that were scam artists for larger companies, so subcontractors of companies ripping off larger companies. It was used to defraud the business sector. 

Mr. GOTTHEIMER. Thank you. Small business advocates, including NFIB, in their letter of comment, have raised concerns that 

some of FinCEN’s BOI rules were not explicitly outlined in statute 

and create costly and complicated requirements for our nation’s 

smallest businesses. 

Mr. Kuhlman, what revisions could be made to reduce the compliance burden for small businesses while still allowing law enforcement to identify bad actors? 

Mr. KUHLMAN. I think fewer beneficial owners, less people having to be listed under substantial control, they expanded that definition. A little bit broader timelines for initial reports and updates, 

that would be where I would start, but I would be happy to follow 

up with other ideas. Thank you. 

Mr. GOTTHEIMER. Thank you. And despite Congress’ intent to 

keep the requirements for reporting companies limited to the most 

useful and important information, many small businesses still have 

questions about when and how to file. Just asking a further question, do you believe FinCEN should do more to help small busi-
30 

nesses understand the rules and requirements of the CTA, and if 

so what should a FinCEN engagement plan look like? 

Mr. KUHLMAN. Yes, Congressman Gottheimer, I think just getting some guidance out quickly, as kind of required by the Small 

Business Regulatory Flexibility Act, would be great. And then once 

that guidance is issued, making sure it is distributed broadly, 

whether it is through SBDCs, as Mr. Nunn suggested, or just basically using every tool in government, anyone who does interact 

with small businesses, would be a good start. 

Mr. GOTTHEIMER. Thank you. Mr. Chairman, I yield back. 

Chairman LUETKEMEYER. The gentleman yields back. The gentleman from Tennessee, Mr. Ogles, is recognized for 5 minutes. 

Mr. OGLES. Thank you, Mr. Chairman, and to our panelists, we 

are getting close to the end, guys, but we thank you for being here, 

and we certainly appreciate you. 

I think we are concerned about the small businesses and the 

compliance costs and inadvertently kind of getting trapped in this 

rulemaking process. 

Mr. Selenke, kind of echoing Mr. Kuhlman’s comments, and I understand this might require some guessing, but what percentage of 

the clients of your bank or similar institutions, who were newly 

designated as reporting companies, do you think actually know 

about the designation? We won’t hold you to this number, by the 

way; we are having some fun here. 

Mr. SELENKE. Yes, Congressman, the number would be zero or 

close to zero. 

Mr. OGLES. Okay, sir. How many would you guess are familiar 

with FinCEN at all? 

Mr. SELENKE. For our customers, the only ones who would be 

aware of it are those who have interacted with it already, so many 

service businesses and individuals have to deal with large currency 

reporting. 

Mr. OGLES. Yes, sir. Thank you. 

Mr. Kuhlman, do the businesses you represent typically wake up 

in the morning with bated breath and excitement to follow the 

news of FinCEN? 

Mr. KUHLMAN. No. No, sir, but we are asking our members in 

our recent banking service and would be able to follow up if they 

are familiar with this. It is just not ready yet, but it should be 

soon, so we will get you that. 

Mr. OGLES. Yes, sir. And again, I think that is the head right, 

is that we have an agency that is imposing on small businesses, 

many of whom are struggling to turn on the lights. They are busy 

running their businesses, and suddenly now you have this rulemaking authority that is essentially legislating authority. And it is 

time that we have clear communications with our businesses by 

letting Congress do its job, not some sort of alphabet agency. But 

we have already discussed the burden this rule places on small 

businesses, and on community banks, so we should consider whether it is worth it. 

Mr. Selenke, you have a wealth of experience in keeping crime 

out of financial systems. Do you believe this rule is the silver bullet 

that will finally stop the flow of cash to the drug cartels? 
31 

Mr. SELENKE. Congressman, no. There will be movement of funds 

to financial institutions, and it is very difficult to identify. I think 

this can help identify players, but it won’t stop the flow of funds. 

Mr. OGLES. And do you think it has been refined to the point 

that it will help banks avoid exposure to criminal enterprises? 

Mr. SELENKE. Currently, no. As it is written, it is focused only 

on the customer due diligence portion of the discussion. As a bank, 

to understand our customers and what is happening, we have the 

whole Know Your Customer (KYC) process from onboarding, to 

their ongoing activity, to sanction screening. And the way it is currently written, it only focuses on a very narrow point of that review, so it would not have much value to us at this point. 

Mr. OGLES. We have a rule that many of the reporting companies 

don’t know exists, and, therefore, can’t carry out, that could, therefore cause well-intentioned business owners legal trouble, that is 

designed in a way that makes compliance unnecessarily difficult in 

their own form, was criticized for being, let’s face it, observed. I 

think it would be obvious at this point that FinCEN should pull 

back, that it is time to go back to the drawing board and perhaps 

talk to someone like you, Mr. Kuhlman, who represents businesses, 

who, businesses, I think, by and large, I would say 99.9 percent 

want to comply, want to have no contact with illicit businesses. 

And you all are perfect conduits for, how do we do this and do it 

in a responsible manner? 

Really quickly, China has engaged in unfair trade practices such 

as currency manipulation, along with the campaign of intellectual 

property theft and economic espionage targeting U.S. companies, in 

addition to human rights violations and facilitating the fentanyl 

crisis across our Southern border and to every small town in America. Considering the real threat that China poses to the United 

States of America on, quite frankly, many fronts, I would kind of 

posit that the real focus here should be China, the illicit actors that 

are using our Southern border and the cartels to move money in 

and out and, quite frankly, cargo in and out of this country, versus 

targeting hardworking Americans who are trying to run businesses 

and are trying to do the right thing. 

Mr. Chairman, I want to thank you for holding this hearing. I 

am out of time, so I yield back. 

Chairman LUETKEMEYER. The gentleman yields back. With that, 

the gentlewoman from California, Mrs. Kim, who is also the Vice 

Chair of the subcommittee, is recognized for 5 minutes. 

Mrs. KIM. Thank you. Thank you, Mr. Chairman. I want to 

thank you and Ranking Member Beatty for holding this hearing. 

FinCEN finalized the first rule under the Corporate Transparency Act, the beneficial ownership information reporting requirements which we have been talking about all day, that was released on September 30, 2022, about 10 months ago, but the rules 

will be effective on January 1, 2024, in less than 6 months. 

Mr. Kuhlman, you represent an organization that advocates for 

the interests of small businesses, so I wanted to get your assessment of how well-informed your small businesses that you represent are about the BOI, and do you believe that beneficial ownership rules should be delayed, giving small businesses more time to 

learn about the law and get ready to comply? 
32 

Mr. KUHLMAN. I don’t think there is much familiarity right now, 

and there is not clear guidance, and there is still some ambiguity 

on who must report. So, I would definitely support a delay, Congress allows for a delay, or for 2-year implementation, excuse me. 

That is consistent with how long the implementation of that customer due diligence rule is, so I think it makes a whole lot of sense. 

At a minimum, Chairman McHenry has a bill that says it should 

not become effective until all of these rules are finalized, and you 

should be able to comment concurrently on all three rules, I believe. 

Mrs. KIM. Thank you. Congress intended for the CTA to be very 

simple for most small business owners, and it was supposed to be 

a postcard-like form that would take a seamless amount of time to 

complete, but it seems that FinCEN has turned that into something else. I want to ask you, how much time do you anticipate it 

will take for small businesses to fill that out, and can you tell us 

and those who are watching, how long is the form, and how many 

questions are included in BOI? 

Mr. KUHLMAN. The draft form had 50 questions. When you just 

copied and pasted from Regulations.gov, it is 8 pages. Now, I am 

sure the government form will be smaller print, wider margins, so 

it will look different, but still, it is a pretty intimidating form with 

a lot of dropdowns and sub-questions based on it. 

Mrs. KIM. Do you anticipate that small businesses will need to 

hire external vendors or outside third parties to submit the form 

appropriately, because we are hearing very low numbers from the 

U.K. database, but we are expecting the cost to be much higher 

than the U.K. numbers. Can you dig into that a little more? 

Mr. KUHLMAN. Yes. An analogy is that for tax compliance, you 

have your CPA; 90 percent of NFIB members utilize a CPA. I do 

anticipate they will at least go to them to ask, is this legitimate, 

and can you help me do it, and I think it is going to depend on 

State to State, whether the State Bar Associations might view 

those experts as unauthorized practicers of law. I know for some 

of the larger firms, they have already said we are not going to help 

with this compliance. It is my understanding that might be because 

the liability is too much for them, but I am afraid that trickles 

down to some of the smaller ones and there might not be an avenue to go, or you might have to go find an attorney who may be 

even higher cost. So, I believe there will be a substantial cost to 

comply. 

Mrs. KIM. We have to make it easier for small businesses to comply, and this is making it very difficult for sure. FinCEN has yet 

to finalize rule number two that will lay out how highly-sensitive 

beneficial ownership is maintained, protected, and accessed by law 

enforcement and financial institutions. Given this lack of clarity, 

how will the ineffective access rule impact your ability to carry out 

your ongoing CDD obligations? 

Mr. KUHLMAN. I would be interested in—— 

Mrs. KIM. Mr. Selenke, can you answer that? 

Mr. SELENKE. Yes, thanks. Thank you, Congresswoman Kim. 

Without clear access, we need to understand that. At this point, we 

have no idea how we would access it, what that access would look 

like, and who would be authorized to access it. And for a larger 
33 

company, that is going to be difficult, because we will have a large 

number of needs to occasionally reference that information. 

Mrs. KIM. So every time a new one comes out, we expect the 

businesses to comply. I am asking these further follow-up questions 

in general. Mr. Kuhlman, you can probably answer this: Do you believe that FinCEN has done its due diligence, educating, informing, 

and going through their active outreach program to inform the 

small businesses about this new BOI coming down? You probably 

had this conversation before, but I wanted to ask. 

Mr. KUHLMAN. At this point, I do not believe it has been sufficient. I will just say that. 

Mrs. KIM. With that, I yield back. Thank you. 

Chairman LUETKEMEYER. The gentlelady’s time has expired. All 

questioners are out of time. I would like to thank our witnesses for 

being with us today. You all did a great job. Thank you so much. 

I just have one thought—I have several thoughts jotted down 

here but I will just expound on one. Throughout this hearing, it 

has been mentioned many times that FinCEN is going beyond the 

intent of the law in their rulemaking and their proposals. The Supreme Court had just, within the last 13 months, struck down 

three different major decisions by the Administration and its agencies that went beyond the law, and it is what they were doing, 

what they were opposing. 

A number of you represent associations, and I hope that you are 

looking at the possibility of taking FinCEN to court. When they go 

beyond the letter of the law, they have to be reined in. And this, 

to me, when you are talking about a $32 billion original cost, Mr. 

Kuhlman’s figures are, and $5.6 billion per year to comply, that is 

a huge issue, a huge burden on our small businesses that had better be done right and better be done according to the way Congress 

intended. If not, I think you have a legitimate reason to go after 

them. I am hopeful that FinCEN will hear what we are talking 

about here today, stop the nonsense, and get back in its lane with 

this rulemaking, and hopefully, we can get this done in a better 

way. 

Mrs. Beatty, would you like to ask a few questions or make a 

comment? 

Mrs. BEATTY. Thank you. Thank you so much for that. Again, let 

me just thank the witnesses for being here and certainly shedding 

light on this. Also, thank you for the financial information, that 

was helpful, from another country, the U.K., to see that small 

amount. And lastly, Mr. Chairman, I want to thank Congressman 

Nunn, who referenced the bipartisanship. 

Taking a look at what we can do, and hopefully we can take 

some of the information from here because I think the objective is, 

as we move into this new era of finance that we are going to be 

into, it is going to be very much like it was decades ago when we 

worked on CTA. So it is here, and I think we have an obligation 

on both ends to figure out why or how it doesn’t go beyond the intent of Congress, but also, how we figure out what is best for small 

businesses, bankers and FinCEN. Thank you, Mr. Chairman. 

Chairman LUETKEMEYER. The Chair notes that some Members 

may have additional questions for this panel, which they may wish 

to submit in writing. Without objection, the hearing record will re-
34 

main open for 5 legislative days for Members to submit written 

questions to these witnesses and to place their responses in the 

record. Also, without objection, Members will have 5 legislative 

days to submit extraneous materials to the Chair for inclusion in 

the record. 

With that, this hearing is adjourned. 

[Whereupon, at 3:49 p.m., the hearing was adjourned.] 
(35) 

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