The 'Beneficial Ownership Information' Reporting Rule & The Surveillance-State
Authored by Bob Bishop via AmericanThinker.com,
The 2021 National Defense Authorization Act created the Beneficial Ownership Information (BOI) reporting rule to ostensibly target money laundering.
Beginning January 1, 2024, the Act mandates U.S. companies, regardless of size, to register their beneficial and controlling owners with the Treasury's Financial Crimes Enforcement Network (FinCEN). FinCEN claims the corporate ownership database will be used exclusively to identify anonymous shell companies involved in money laundering and terrorist activities. Once again, like the Patriot Act, it grants surveillance powers violating the Constitution. There is no provision for judicial oversight to protect individual rights as if that ever mattered.
Reporting requirements apply to an estimated 33 million reporting companies defined as corporations, limited liability corporations, or similar entities. There are twenty-three categories of companies that are exempt from reporting. They are nonprofits, banks, insurance companies, investment funds, public companies, broker-dealers, public accounting firms, money-transmitting businesses, and existing shell companies with no foreign owners, assets, or active businesses.
The main scope is Main Street businesses like small owner-operated businesses like restaurateurs, construction trades, professional service organizations, retailers, and other privately owned businesses. Reporting requirements take effect in 2024 for newly-formed entities and on January 1, 2025, for existing entities.
The law imposes its heaviest burdens on law-abiding U.S. citizens. At the same time, criminal enterprises will not report, manipulate, or avoid disclosure requirements undermining the law. This is similar to municipal gun control restrictions; criminals just ignore the law. The FinCEN database will be composed of law-abiding companies.
Reporting Requirements
“Beneficial owner” is defined as “an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise exercises substantial control over the entity” or “owns or controls not less than 25 percent of the ownership interests of the entity.” For each of the covered individuals, the reporting company must furnish to FinCEN their full legal name, birth date, current residential or business street address, IRS Taxpayer Identification Number, and “unique identifying number from an acceptable identification document,” such as an unexpired passport or a state-issued identification card or driver’s license. Any changes in a covered individual’s address, a new driver’s license, or beneficial ownership must be reported.
Reporting companies that deliberately fail to comply with the reporting requirements are subject to a civil penalty of up to $500 per day, up to $10,000, two years’ imprisonment, or both a fine and confinement. An interesting dilemma is whether all beneficial owners will be assessed civil and criminal penalties. Will BOI or the IRS require banks to freeze the corporate entity's account without due process?
The IRS agent staff is expanding, and it will have the muscle to take advantage of BOI’s corporate ownership database for targeted investigations and audits with the possibility of targeting political opposition. If you think I’m kidding; keep in mind the IRS targeted and relentlessly audited directors and officers of Tea Party nonprofits only because they were considered dissenters. BOI will be a tool of tyranny.
Will the Biden family crime syndicate comply by filing on its twenty-plus LLCs, which have no specific business interests?
FinCEN may share the reporting companies’ reported personal data with federal, state, and local law enforcement agencies and foreign governments with U.S. treaties. Also, financial institutions will use the corporate ownership database for customer due diligence provided the reporting company consents. We can anticipate financial institutions requiring mandatory access to do business.
BIO is a dragnet using suspicionless searches and compelled disclosures to look for potential financial crimes, which violates privacy. State entity formations don't require disclosure of beneficial ownership, which provides privacy and prevents intrusion from the Federal government. Privacy is one of the most significant benefits of incorporation in Delaware. BOI is an unconstitutional usurping of a state's power to charter and regulate an entity.
The release of personal data to various federal agencies without the consent of the reporting company is an unreasonable search and seizure violation of the Fourth Amendment. Compelling reporting is also self-incrimination and a violation of the Fifth Amendment, and an invasion of the right to privacy violates the Ninth Amendment. Further, BOI violates the First Amendment's right to free speech and private association. BOI is unconstitutional.
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Bob Bishop is a forensic investigator and retired CPA.
