THE CONSTITUTIONAL RIGHT TO PRIVACY FOR SMALL BUSINESS OWNERS ENDS ON JANUARY 1, 2025.
On January 1st, 2025, the Corporate Transparency Act will go into full effect. It requires that most small businesses in America provide a report disclosing specific information about every individual having substantial control or owning a specific percentage of the business, known as a Beneficial Owner, to the government. Never before in America has there been a database that contains personal data about beneficial owners of privately held businesses.
It might sound innocuous at first, but the adverse effects will devastate a small business owner’s right to privacy and protection against unreasonable searches. Having a database that the federal government, state and local governments, law enforcement, financial institutions, and even foreign governments can access may expose these beneficial owners to fraud, intimidation, and harassment.
THE ORIGIN OF THE CTA
The Corporate Transparency Act was enacted on January 1, 2021, as part of the National Defense Authorization Act (NDAA) for Fiscal Year 2021, despite President Trump's veto at that time. Wall Street and Big Banks openly supported NADA. Proponents of the law claim that it is critical in the battle against money laundering and tax evasion.
Several significant voices have spoken out against the CTA, which they decry as unconstitutional. The National Small Business Association filed a suit against the CTA in November 2022, winning a favorable ruling from the U.S District Court of Northern Alabama in March 2024. The Department of Justice appealed that ruling, and the case is now being heard in the Eleventh Circuit Court of Appeals in Alabama.
WHAT IS A BENEFICIAL OWNER?
A Beneficial Owner is defined as any individual who either owns 25% or more of the company or who holds significant control over the company’s operations. For example, a husband and wife who jointly and equally own a small business would both be considered beneficial owners. In the case of a larger company, an investor might only own a 15% share in the company but also hold the title of President and have the authority to execute major decisions of the company, such as large expenditures, acceptance of loans, or purchases of significant assets. That individual would still be regarded as a Beneficial Owner of the company.
Even community and certain volunteer organizations operating as business entities are subject to the CTA and must disclose the personal information of their volunteer directors as beneficial owners.
THE REAL TRANSPARENCY OF THE CORPORATE TRANSPARENCY ACT
To begin with, the Corporate Transparency Act, or CTA, is a misnomer. It has nothing to do with the “transparency” of big powerful corporations and everything to do with snooping on small businesses. With few exceptions, every small business with 20 or fewer employees (or $5 million or less in annual revenue) will be required to report to the Financial Crimes Enforcement Network (FinCEN) the personal information of every beneficial owner. Personal information includes their name, address, date of birth, and driver’s license or passport numbers. This is unacceptable and wrought with the potential for abuse by banks and governments around the world. No wonder large, powerful banks support the CTA.
The Fourth Amendment of our Constitution protects citizens from unreasonable government searches. Providing the government with a registry of every beneficial owner of a small business is an unreasonable search. The Fourth Amendment exists to prevent abuse by the government, and the CTA will be abused by the government. What’s worse, even foreign governments can abuse this information. That’s right, under the CTA, foreign governments are able to access this US beneficial owner data with broad opportunities.
Banks are already required to collect information on beneficial owners as part of the Bank Secrecy Act. As a financial institution, Old Glory Bank believes it is our duty to collect this information as required, but also to keep it private. Government agencies should be required to obtain a warrant to collect this information. The CTA is an afront to the privacy of business owners and individuals.
The claim by the government that the CTA is necessary to stop money laundering, child trafficking, tax evasion, and terrorist activities is an excuse. Bad actors will not comply with the CTA, so this wide net will only ensnare the law-abiding small business owners.
THE FINE FOR NOT COMPLYING
Any small business that does not comply with the required Beneficial Owner Information (BOI) report to FinCEN by January 1, 2025, will be subjected to criminal fines of up to $10,000, up to two years in prison, or both. In addition, there will be an additional civil fine of $591 PER DAY.
Unfortunately, the cost of complying may be even worse. You will forfeit your right to privacy and allow governments and banks worldwide to access your private information.
PUT A STOP TO CTA
Old Glory Bank is a pro-America bank built on privacy, security, and liberty. We serve small businesses from coast to coast with our industry-best online banking. We will never stop fighting for small businesses. Please join us in this fight.
Contact President Trump and request that he direct his new Treasury Secretary to immediately stop FinCEN from requiring personal information from small business owners. Next, call your Senator and Representative and demand that they repeal the Corporate Transparency Act.
Protecting our Privacy, Security, and Liberty as individuals and as business owners is a responsibility we all share. We stand with you.
