The federal government's latest attempt to catch money launderers is doomed to fail. Here's why.
In this clip from the Federal Tax Updates podcast, Roger Harris and I discuss the many flaws in the new beneficial ownership information reporting requirement:
It requires ALL businesses to file reports, not just those suspected of wrongdoing, creating a "database of honest people"
Money launderers are highly unlikely to self-report or identify the true owners
Steep criminal penalties for non-compliance will ensnare many innocent business owners
FinCEN, the agency tasked with enforcement, has only 342 total employees to monitor 20+ million businesses
There is no practical way for the government to verify the accuracy of BOI reports or identify non-filers
The law is fatally flawed because those intent on money laundering will never provide accurate ownership information. Congress should repeal this burdensome and ineffective reporting regime. At minimum, it should be limited to businesses engaged in interstate commerce, the 30-day reporting window should only apply to major ownership changes, and minor updates should only be required annually.
BOI reporting is security theater that will bury FinCEN in millions of forms from law-abiding business owners while sophisticated criminals continue to exploit the system. It's time for Congress to go back to the drawing board.
